Investment: Tax policy and the cost of capital

Investment: Tax policy and the cost of capital

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qDale Jorgenson . . . is preeminently the master of the territory between economics and statistics, where both have to be applied to the study of concrete probl ems. His prolonged exploration of the determinants of investment spending, whatever its ultimate lessons, will certainly long stand as one of the finest example s in the marriage of theory and practice in economics.q -- John Bates Clark Medal citation by the American Economic Association These studies of the cost of capital will inspire and guide policy-makers who share the goal of making the allocation of capital in a market economy more efficient. Volume 2 is devoted to the cost of capital approach to tax policy. This approach has supplied an important intellectual impetus for reforms of capital income taxation in the United States and around the world. Widespread applications of the cost of capital and the closely related concept of the marginal effective tax rate are due to the fact that these concepts facilitate the representation of economically relevant features of complex tax statutes in a highly succinct form.The effects of tax policy enter the investment function through the desired level of capital stock. ... In the formulas for the rental value of capital goods, the tax rate u, the aftertax rate of return / , the investment goods price q, and the lifetime ofanbsp;...

Title:Investment: Tax policy and the cost of capital
Author:Dale Weldeau Jorgenson
Publisher:MIT Press - 1996


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