TY  - JOUR
AU  - Auerbach,Alan J.
TI  - The Dynamic Effects of Tax Law Asymmetries
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1152
PY  - 1986
Y2  - August 1986
UR  - http://www.nber.org/papers/w1152
L1  - http://www.nber.org/papers/w1152.pdf
N1  - Author contact info:
Alan J. Auerbach
Department of Economics
530 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0711
Fax: 510/643-0413
E-Mail: auerbach@econ.berkeley.edu
AB  - Under current U.S. tax law, a distinction is made between gains and losses by businesses. Losses that must be "carried forward" are subject to two penalties: a loss of interest, and expiration after fifteen years. Previous examinations have focused on the higher expected tax payments such a tax system without "full loss offset" imposes on risky projects.This paper presents a dynamic analysis of the impact of taxation on investment when gains and losses are treated asymmetrically. The results provide a basis for analyzing recent tax changes, particularly the controversial"safe-harbor leasing" provisions of the 1981 tax legislation.
ER  -