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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
    DOI: 10.17310/ntj.2011.4.07
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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, December.
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    Cited by:

    1. Ctirad Slavík & Hakki Yazici, 2022. "Wage Risk and the Skill Premium," The Economic Journal, Royal Economic Society, vol. 132(646), pages 2207-2230.
    2. Ctirad Slavík & Hakki Yazici, 2019. "On the consequences of eliminating capital tax differentials," Canadian Journal of Economics, Canadian Economics Association, vol. 52(1), pages 225-252, February.
    3. Slavik, Ctirad & Yazici, Hakki, 2015. "Determinants of Wage and Earnings Inequality in the United States," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113021, Verein für Socialpolitik / German Economic Association.
    4. 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.
    5. Slavík, Ctirad & Yazici, Hakki, 2014. "Machines, buildings, and optimal dynamic taxes," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 47-61.
    6. Yi‐Chan Tsai & C. C. Yang & Hsin‐Jung Yu, 2022. "Rising skill premium and the dynamics of optimal capital and labor taxation," Quantitative Economics, Econometric Society, vol. 13(3), pages 1061-1099, July.

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