This report examines the taxation of corporate gains on depreciable business property, an important topic that has received little attention in the economic literature. The authors argue that current law, under which gains on those sales are taxed at ordinary tax rates and buyers are allowed to depreciate their purchase cost, places a tax penalty on sales and raises the cost of capital, thereby discouraging investment. In a simple model, they think, three policies would eliminate the impact on user cost and investment: zero taxation of capital gains with recapture of excess depreciation allowances at ordinary tax rates, zero taxation of capital gains with the seller's basis carrying over to the buyer, and reduced tax rates on capitalgains. The basis carryover and reduced-rate policies appear to the authors to be preferable in a more general framework.
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In this conference, veterans of the Iraq and Afghanistan wars, mental health and disability experts, and an economist will discuss current hurdles to rehabilitation, and suggest alternatives that could more effectively expedite the reintegration of veterans into their families, communities, and workplaces.
Please join Representative Randy Forbes (R-VA), AEI, the Heritage Foundation, and the Foreign Policy Initiative for a timely discussion on the 2014 QDR and the future of American defense strategy in an era of constrained budgets.
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AEI’s Philanthropic Freedom Project welcomes Bill Gates for an exclusive event at AEI.