Capital depreciation allowances, redistributive taxation, and economic growth

Rehme, Günther

doi:10.1111/jpet.12603

Cited by 2 publications

(1 citation statement)

References 47 publications

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“…See, for instance, Jones et al (1997) and Guo and Lansing (1999) who show that investment subsidies may take the form of accelerated depreciation. The consequences for an optimal tax policy with the special design of investment subsidies in the form of accelerated depreciation allowances is analyzed in detail in a companion paper (see Rehme, 2020). 13 Thus, the support of 𝜃 is 𝜃 ∈ (−∞, 1) which is simply assumed to hold from now on.…”

Section: Governmentmentioning

confidence: 99%

Investment subsidies and redistributive capital income taxation in a neoclassical growth model

Rehme

2023

Bulletin of Econ Res

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How do investment subsidies bear on pure redistribution when coupled with capital income taxes? In a heterogeneous agent, neoclassical growth framework it is found that on impact, with no optimizing behavior, investment subsidies are good for growth but bad for redistribution. The opposite holds for capital income taxes. But when the government acts as a Stackelberg leader vis‐à‐vis the private sector (the follower), the optimal feedback policy is by construction time‐consistent and implies that in a long‐run optimum the tax scheme does not distort accumulation. This holds regardless of social preferences. For the feedback Stackelberg equilibrium I find that (pure) redistribution can go either way and capital income taxes are nonzero in the long‐run, time‐consistent optimum, depending on the social weight of those who receive redistributive transfers, the distribution of pretax factor incomes, and the intertemporal elasticity of substitution. It is argued that investment subsidies may be an important indirect tool for redistribution, and may allow for the separation of “efficiency” and “equity” concerns.

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Section: Governmentmentioning

confidence: 99%

Investment subsidies and redistributive capital income taxation in a neoclassical growth model

Rehme

2023

Bulletin of Econ Res

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A Depreciation Method Based on Perceived Information Asymmetry in the Market for Electric Vehicles in Colombia

Domínguez,

Pedreros,

Delgadillo

et al. 2024

WEVJ

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Throughout this article, an alternative depreciation method for electric vehicles (EVs) is presented, addressing the challenge of information asymmetry—a common issue in secondary markets. The proposed method is contrasted with traditional models, such as the Straight-Line Method (SLM), the Declining Balance Method, and the Sum-of-Years Digits (SYD) method, as these classic approaches fail to adequately consider key factors such as mileage and secondary aspects like battery degradation and rapid technological obsolescence, which critically impact the residual value of used EVs. The presented approach employs an adverse selection model that incorporates buyers’ and sellers’ perceptions of vehicle quality from the information recorded on e-commerce platforms, improving the depreciation estimation. The results show that the proposed method offers greater accuracy by leveraging asymmetric information extracted from web portals. Specifically, the method identifies a characteristic intersection point, marking the moment when the model aligns most closely with the data obtained through traditional methods in terms of precision. The analysis through the density of price estimations by vehicle model year indicates that, beyond 1.8 months, the proposed model provides more reliable results than traditional methods. The proposed model allows buyers to identify undervalued assets and sellers to obtain a fair market value, mitigating the risks associated with adverse selection, reducing uncertainty, and increasing market transparency and trust. It fosters equitable pricing between buyers and sellers by addressing the implications of adverse selection, where sellers—possessing more information about the vehicle’s condition than buyers—can dominate market transactions. This model restores balance by ensuring fairer valuation based on vehicle usage, primarily addressing the lack of critical data available on e-commerce platforms, such as battery certifications, among others.

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Capital depreciation allowances, redistributive taxation, and economic growth

Cited by 2 publications

References 47 publications

Investment subsidies and redistributive capital income taxation in a neoclassical growth model

Investment subsidies and redistributive capital income taxation in a neoclassical growth model

A Depreciation Method Based on Perceived Information Asymmetry in the Market for Electric Vehicles in Colombia

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