The Taxation of Risky Assets
This paper reconsiders the effects of taxation on risky assets, recognizing the importance of variations in asset prices. We show that earlier analyses which assumed that depreciation rates are constant and that the future price of capital goods is known with certainty are very misleading, as guides to the effects of corporate taxes. We then examine the concept of economic depreciation in a risky environment, and show that depreciation allowances, if set ex-ante, should be adjusted to take account of future asset price risk. Some empirical calculations suggest that these adjustments are large, and have important implications for the burdens of, and non-neutralities in, the corporate income tax.
|Date of creation:||Jun 1982|
|Date of revision:|
|Publication status:||published as Bulow, Jeremy I. and Lawrence H. Summers. " The Taxation of Risky Assets." Journal of Political Economy, Vol. 92, No. 1, (February 1984), pp. 20-39.|
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NBER Working Papers
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NBER Working Papers
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- Mintz, Jack M, 1981. "Some Additional Results on Investment, Risk Taking, and Full Loss Offset Corporate Taxation with Interest Deductibility," The Quarterly Journal of Economics, MIT Press, vol. 96(4), pages 631-42, November.
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