Uncertainty, Welfare Cost and the “Adaptability” of U.S. Corporate Taxes

摘要: Alternative corporate tax systems differ in their ability to adapt changes the rate of inflation. In absence complete indexing depreciation allowances, policymakers may use a particular expected inflation set accelerated allowances way that minimizes welfare loss from misallocation capital. This is nonlinear function assumed rate, however, so at be quite different loss. We compute these two concepts for each three alternative schemes U.S. and relationships between interest rates. One important finding Auerbach-Jorgenson first-year recovery plan not equivalent as often claimed, if uncertainty about implies real after-tax discount rate.