Many economists favor revenue-neutral reforms that broaden the corporate tax base and lower the statutory tax rate. Economic analysis provides partial, but not complete, support for this view. Welfare gains do not arise from a lower tax rate as such, but from leveling the playing field between...

Congress has recently considered taxing the carried interest of private equity fund managers at ordinary rates rather than at the 15 percent rate that currently applies to a portion of this income. The proposed change is intended to promote neutrality between the labor compensation of fund...

On March 9th, President Bush signed the Job Creation and Worker Assistance Act of 2002. The Act included a temporary increase in depreciation allowances for business spending on equipment and software (E&S) in the form of 30 percent partial expensing. In this paper we explore the impact of the...

Auerbach demonstrated that inflation can lead to interasset distortions, with the negative effects of higher inflation unambiguously declining with asset life in the case of geometric economic and tax depreciation. We show that, when tax depreciation is straight-line, higher inflation can have...

Reducing the double tax on corporate income has an ambiguous effect on marginal effective tax rates. It depends on the specifics of the policy, the extent of debt finance, whether one adopts the new or the old view of dividend taxes, the identity of the marginal investor, the importance of...

Provides a discussion of the important tax changes affecting investment introduced in TRA'86. Concludes that the cost of capital innovations contributes to investment forecast innovations and that the effect of the cost of capital on equipment and structures investment is significant both...