TY  - JOUR
AU  - Bulow,Jeremy I.
AU  - Summers,Lawrence H.
TI  - The Taxation of Risky Assets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 897
PY  - 1984
Y2  - July 1984
UR  - http://www.nber.org/papers/w0897
L1  - http://www.nber.org/papers/w0897.pdf
N1  - Author contact info:
Jeremy I. Bulow
Stanford University
Graduate School of Business
Stanford, CA  94305-7298
Tel: 650/723-2160
Fax: 650/725-8916
E-Mail: jbulow@stanford.edu

Lawrence H. Summers
Harvard Kennedy School of Government
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9322
Fax: 617/495-0436
E-Mail: lhs@harvard.edu
AB  - This paper reconsiders the effects of taxation on risky assets, recognizing the importance of variations in asset prices. We show that earlier analyses which assumed that depreciation rates are constant and that the future price of capital goods is known with certainty are very misleading, as guides to the effects of corporate taxes. We then examine the concept of economic depreciation in a risky environment, and show that depreciation allowances, if set ex-ante, should be adjusted to take account of future asset price risk. Some empirical calculations suggest that these adjustments are large, and have important implications for the burdens of, and non-neutralities in, the corporate income tax.
ER  -