Incentive Effects of Taxes on Income From Capital:  Alternative Policies in the 1980's

Fullerton, Don; Henderson, Yolanda K.

doi:10.3386/w1262

Cited by 17 publications

(24 citation statements)

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“…The range of changes in the user cost of capital estimated by Boskin (1985b) and presented in Table 6 is quite similar to those estimated in earlier prominent studies, including Hulten and Robertson (1984), Gravelle (1983Gravelle ( , 1985, Auerbach (1983), and Fullerton and Henderson (1984). Each study reports substantial decreases in the user cost of capital or in effective tax rates on a marginal investment due to the investment incentives in ERTA/TEFRA.…”

Section: Tax Incentives and Investmentsupporting

confidence: 70%

“…Auerbach (1983) also estimates that the welfare cost of the distortions within and between industries was both small and approximately half under ERTA/TEFRA of the average over the previous decade. Fullerton and Henderson (1984) also estimate that the tax-induced distortion in the allocation of capital was surprisingly small. Some potential problems with the typical effective tax rate calculations underlying such studies are discussed below.…”

Section: Tax Reforms In the 1980s And Their Economic Effectsmentioning

confidence: 99%

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Tax Policy and Economic Growth: Lessons From the 1980s

Boskin

1988

Journal of Economic Perspectives

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The past seven years of U.S. economic policy and performance constitute a truly remarkable, if confusing, experiment. Few would have guessed in 1980 that inflation would fall rapidly to 4 percent and hold pretty steady during a lengthy recovery; that productivity growth would partially rebound, the national debt more than double, capital imports reach $150 billion in a single year; or that employment would continue to expand at rates envied by other advanced economies. Perhaps fewer still would have predicted two major and two minor tax reforms would be passed in six years, a flip-flop in depreciation schedules, and a top personal tax rate below 30 percent. While it is always easier to draw inferences concerning economic growth, its determinants, and policies affecting the determinants with long historical hindsight, this paper will attempt to provide information, evaluation, and conjecture to draw some tentative lessons about the effects of tax policies in the 1980s on long-run economic growth.

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Section: Tax Incentives and Investmentsupporting

confidence: 70%

Section: Tax Reforms In the 1980s And Their Economic Effectsmentioning

confidence: 99%

Tax Policy and Economic Growth: Lessons From the 1980s

Boskin

1988

Journal of Economic Perspectives

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“…A number of studies, notably Auerbach (1983) and Fullerton and Henderson (1984), have made rather elaborate calculations of the deadweight losses arising from the failure of the tax system to impose equal burdens on different types of corporate investment. In large part it is the assumed differential taxation of equipment and structures that drive the results of these studies.…”

Section: Patterns Of Structures Ownership and Investmentmentioning

confidence: 99%

Notes on the Tax Treatment of Structures

Gordon

Hines

Summers

1986

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“…Also, d337' 11e=663 hd=.337, and h=.663. The similarity of debt/equity ratios in the three sectors is explained in Fullerton and Henderson (1984), while no source provides market value of outstanding debt and equity on specific assets. …”

Section: Appendix: Parameters For Calculation Of Capital Costsmentioning

confidence: 99%

Incentive Effects of Taxes on Income From Capital: Alternative Policies in the 1980's

Cited by 17 publications

References 1 publication

Tax Policy and Economic Growth: Lessons From the 1980s

Tax Policy and Economic Growth: Lessons From the 1980s

Notes on the Tax Treatment of Structures

A Disaggregate Equilibrium Model of the Tax Distortions Among Assets, Sectors, and Industries

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