Depreciation according to arbitrary formulae would cease. Instead, companies would depreciate assets as they pay off the debt against those assets. If companies acquire assets without borrowing money, the entire asset would be tax-deductible immediately. The same rules would apply to buildings, equipment, intellectual property, etc but not financial assets. If the company does not have enough profits to offset the deductions, deductions would be able to be carried forward.
The reason for not allowing depreciation to exceed equity is to prevent deduction double dipping.