The Indexation of Interest, Depreciation, and Capital Gains and Tax Reform in the U.S.Journal of Public Economics (1987)
AbstractThe Treasury's 1984 plan is a more comprehensive income tax, including the indexation of interest, depreciation, and capital gains. The 1985 President's proposal retains some of this indexation. The author measures the incentives under each regime to make marginal investments in the corporate, noncorporate and housing sectors. Inflation causes current effective tax rates to rise for some assets and fall for others. Overall rates fall with inflation, and the corporate tax is completely offset by credits, allowances, and deductions. Under the proposals, the corporate tax reemerges, effective tax rates are much more uniform, and the interference of inflation is virtually eliminated.
Publication DateFebruary, 1987
Citation InformationDon Fullerton. "The Indexation of Interest, Depreciation, and Capital Gains and Tax Reform in the U.S." Journal of Public Economics Vol. 32 (1987)
Available at: http://works.bepress.com/don_fullerton/43/