English, Article, Journal or magazine article edition: Adjustment costs and the neutrality of income taxes Matt Benge; George Fane

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Bookmark: http://trove.nla.gov.au/version/42223
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Adjustment costs and the neutrality of income taxes
Author
  • Matt Benge
  • George Fane
Physical Description
  • preprint
Notes
  • A true 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).
  • Capital gains tax, depreciation, income tax, investment neutrality.
  • RePEc:pas:papers:2006-04
Language
  • English
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