Adjustment costs and the neutrality of income taxes
Description
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]
dc.contributor.author | Benge, Matt | |
---|---|---|
dc.contributor.author | Fane, George | |
dc.date.accessioned | 2006-05-04 | |
dc.date.accessioned | 2006-05-24T22:40:23Z | |
dc.date.accessioned | 2011-01-05T08:30:34Z | |
dc.date.available | 2006-05-24T22:40:23Z | |
dc.date.available | 2011-01-05T08:30:34Z | |
dc.date.created | 2006 | |
dc.identifier.uri | http://hdl.handle.net/1885/43258 | |
dc.identifier.uri | http://digitalcollections.anu.edu.au/handle/1885/43258 | |
dc.description.abstract | 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 intuition underlying the closely related results of Hartman (1978) and Abel (1983). | |
dc.format.extent | 225504 bytes | |
dc.format.extent | 360 bytes | |
dc.format.mimetype | application/pdf | |
dc.format.mimetype | application/octet-stream | |
dc.language.iso | en_AU | |
dc.subject | income tax | |
dc.subject | capital gains tax | |
dc.subject | investment neutrality | |
dc.title | Adjustment costs and the neutrality of income taxes | |
dc.type | Working/Technical Paper | |
local.description.refereed | no | |
local.identifier.citationmonth | jan | |
local.identifier.citationyear | 2006 | |
local.identifier.eprintid | 3433 | |
local.rights.ispublished | no | |
dc.date.issued | 2006 | |
local.contributor.affiliation | Economics, RSPAS | |
local.contributor.affiliation | ANU | |
local.citation | no.4 2006 | |
Collections | ANU Research Publications |
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