IDEAS home Printed from https://ideas.repec.org/a/mhr/finarc/urndoi10.1628-fa-2020-0005.html
   My bibliography  Save this article

The Role of Leasing in the Effectiveness of Corporate Tax Policy: Evidence from the 2002 Bonus Depreciation

Author

Listed:
  • Jongsang Park
  • Sukha Shin

Abstract

Firms can use capital that they either purchase or lease, but these alternatives are treated differently for tax purposes. This paper derives the demand for leased capital as a function of tax parameters, and uses the model to estimate the responsiveness of leasing to the 2002 bonus depreciation, finding strong evidence that depreciation allowances influence leasing patterns. Firms that stood to benefit the least from depreciation allowances were the most likely to lease capital during the temporary bonus depreciation period. Specifically, we find that a lessee with a marginal tax rate of zero increases the fraction of leased investment by up to 10 percentage points during the period, compared to a fully taxed lessee.

Suggested Citation

  • Jongsang Park & Sukha Shin, 2020. "The Role of Leasing in the Effectiveness of Corporate Tax Policy: Evidence from the 2002 Bonus Depreciation," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 76(2), pages 121-145.
    • Handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2020-0005
    DOI: 10.1628/fa-2020-0005
    as

    Download full text from publisher

    File URL: https://www.mohrsiebeck.com/en/article/the-role-of-leasing-in-the-effectiveness-of-corporate-tax-policy-evidence-from-the-2002-bonus-depreciation-101628fa-2020-0005
    Download Restriction: Fulltext access is included for subscribers to the printed version.
    File URL: https://libkey.io/10.1628/fa-2020-0005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    taxes; investment; leasing; bonus depreciation;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2020-0005. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Wolpert (email available below). General contact details of provider: https://www.mohrsiebeck.com/fa .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.