The Case for Permanent Expensing

Publication Date: October 2010

Publisher: National Center for Policy Analysis (U.S.)

Author(s): Stephen Entin

Research Area: Government

Keywords: Depreciation; Bush Tax Cuts; Interest Rates; Loan

Type: Report

Coverage: United States

Abstract:

Investment spending has been sluggish in spite of record low interest rates and enormous levels of excess reserves in the banking system. Banks have been criticized for not lending enough, but the real problem is that not enough businesses want to borrow. Businesses are hesitant because the expected after-tax returns on added capital are too low to make adding to the capital stock worthwhile. Instead of easier money, we need higher after-tax returns to capital to create investment and growth.