Adjustment costs and the neutrality of income taxes
A yes income tax would not affect asset values or investment decisions for given values of cash flows and pre-tax interest rates (Samuelson, 1964). However, most so-called income taxes do not fully tax capital gains on accrual. This note shows that in the absence of adjustment costs, investment decisions are not distorted by the lack of a comprehensive tax on the capital gains on unimproved land, provided that the depreciation of improvements is allowed as a tax deduction. It also provides the...[Show more]
|Collections||ANU Research Publications|
|wp-econ-2006-04.pdf||220.22 kB||Adobe PDF|
|3433-01.2006-05-03T06:02:07Z.xsh||360 B||EPrints MD5 Hash XML|
Items in Open Research are protected by copyright, with all rights reserved, unless otherwise indicated.