Not a panacea for economic growth: the case of accelerated depreciation.

From: Virginia Tax Review | Date: January 1, 2007| Author: | Copyright information

I. INTRODUCTION

Accelerated depreciation deductions have been a tenet of U.S. tax policy for the past fifty years. They are widely believed to promote economic growth. (1) In this paper, I argue that accelerated depreciation is based on a questionable economic growth theory and suggest switching to a depreciation method that is closer to economic depreciation. (2) This may allow lowering tax rates (3) or increasing tax incentives to research and development--the real engine of economic growth. (4)

Accelerated depreciation policy can be traced back to an influential 1953 ...

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