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The New Economics of Accelerated Depreciation

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  • Alan J. Auerbach

Abstract

The Economic Recovery Tax Act of 1981 included the largest business tax cut in U.S. history, embodied in the Accelerated Cost Recovery System. This paper describes in detail the provisions of the new treatment of depreciable property ,and analyzes in a fairly nontechnical way its economic impact. Particular attention is paid to a novel part of ACRS that creates a "safe harbor" for a wide range of sale-leaseback arrangements, effectively permitting the sale of depreciation deductions by investors without taxable income.

Suggested Citation

  • Alan J. Auerbach, 1982. "The New Economics of Accelerated Depreciation," NBER Working Papers 0848, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0848
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    Cited by:

    1. Jason Cummins & Trevor Harris & Kevin Hassett, 1995. "Accounting Standards, Information Flow, and Firm Investment Behavior," NBER Chapters, in: The Effects of Taxation on Multinational Corporations, pages 181-224, National Bureau of Economic Research, Inc.
    2. Severin Borenstein, 2017. "Private Net Benefits of Residential Solar PV: The Role of Electricity Tariffs, Tax Incentives, and Rebates," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(S1), pages 85-122.
    3. Cui, Wei & Hicks, Jeffrey & Xing, Jing, 2022. "Cash on the table? Imperfect take-up of tax incentives and firm investment behavior," Journal of Public Economics, Elsevier, vol. 208(C).
    4. Alan J. Auerbach, 1986. "The Dynamic Effects of Tax Law Asymmetries," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(2), pages 205-225.
    5. He, Fan & Zeng, Xin & Xue, Jingwen & Xu, Jianbin, 2024. "The hidden cost of corporate tax cuts: Evidence from worker health in China," China Economic Review, Elsevier, vol. 86(C).
    6. Wang, Jiangyuan & Fan, Wenlin & Wang, Zhixiao, 2024. "Tax incentives and earnings management: A study based on accelerated depreciation policy in China," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 281-296.

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