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Reducing Depreciation Allowances to Finance a Lower Corporate Tax Rate

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  • Gravelle, Jane G.

Abstract

This paper considers the tradeoffs in using revenues from slowing depreciation deductions to lower the corporate tax rate. It estimates how much the rate could be lowered and the resulting effective tax rates on different types of assets. Two issues arise: the overall effect on marginal tax burdens and the challenges of using a provision that largely reflects timing effects to finance a steady state rate reduction.

Suggested Citation

  • Gravelle, Jane G., 2011. "Reducing Depreciation Allowances to Finance a Lower Corporate Tax Rate," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(4), pages 1039-1053, December.
  • Handle: RePEc:ntj:journl:v:64:y:2011:i:4:p:1039-53
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    References listed on IDEAS

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    1. Jane G. Gravelle, 1994. "The Economic Effects of Taxing Capital Income," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262071584, January.
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    Cited by:

    1. Díaz, Antonia & Franjo, Luis, 2016. "Capital goods, measured TFP and growth: The case of Spain," European Economic Review, Elsevier, vol. 83(C), pages 19-39.
    2. Slavík, Ctirad & Yazici, Hakki, 2014. "Machines, buildings, and optimal dynamic taxes," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 47-61.

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