http://danieljmitchell.wordpress.com/2013/04/04/identifying-the-right-depreciation-tax-policy-the-most-boring-but-important-article-you-will-read-today/Identifying the Right “Depreciation” Tax Policy: The Most Boring – but Important – Article You Will Read TodayI’m normally reluctant to write about “depreciation” because I imagine eyes glazing around the world. After all, not many people care about the tax treatment of business investment expenses.
But I was surprised by the positive response I received after writing a post about Obama’s demagoguery against “tax loopholes” for corporate jets. So with considerable trepidation let’s take another look at the issue.
First, a bit of background.
Every economic theory agrees that investment is a key for long-run growth and higher living standards. Even Marxist and socialist theory agrees with this insight (though they foolishly think government somehow is competent to be in charge of investments).Let’s look at two remarkable charts, starting with one that shows the very powerful link between total investment and wages for workers.
As you can see (click the chart to see a larger version), if we want people to earn more money, it definitely helps for there to be more investment. More “capital” means that workers have higher productivity, and that’s the primary determinant of wages and salary.
Our second chart shows
how the internal revenue code treats income that is consumed compared to how it penalizes income that is saved and invested. Simply stated, the current system is very biased against capital formation because of the combined impact of capital gains taxes, corporate income taxes, double taxes on dividends, and death taxes.http://danieljmitchell.wordpress.com/2013/04/04/identifying-the-right-depreciation-tax-policy-the-most-boring-but-important-article-you-will-read-today/
