The Efficiency Cost of Asset Taxation in the U.S. after Accounting for Intangible Assets
AbstractThis paper comprehensively calculates corporate intangible assets by industry from 1998 to 2009, and evaluates the impact of expensing intangible assets on the cost of capital, the METR, and the welfare cost of inter-asset taxation, under current law and alternative tax policy including recent policy proposals. It also estimates the welfare cost of `leveling the playing field’. I find that capitalizing intangible assets can reduce the METR by up to 28 percentage points in finance. The intangible-inclusive welfare cost of inter-asset taxation is twice as large as a conventional measure under current law, and can be much larger than the tax revenue loss of alternative policy. Leveling the playing field may reduce or increase the deadweight loss of inter-asset taxation. The results provide a valuable input for research estimating the impact of investment tax incentives.
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Bibliographic InfoPaper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0199.
Length: 67 pages
Date of creation: Mar 2013
Date of revision:
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Intangible Assets; Cost of Capital; Welfare Cost; Inter-asset Taxation; Bonus Depreciation;
Find related papers by JEL classification:
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-11-09 (Accounting & Auditing)
- NEP-ALL-2013-11-09 (All new papers)
- NEP-IPR-2013-11-09 (Intellectual Property Rights)
- NEP-MAC-2013-11-09 (Macroeconomics)
- NEP-PBE-2013-11-09 (Public Economics)
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