Chapter

Summary and Conclusion

Dale W. Jorgenson and Kun‐Young Yun

in Tax Reform and the Cost of Capital

Published in print August 1991 | ISBN: 9780198285939
Published online November 2003 | e-ISBN: 9780191596490 | DOI: http://dx.doi.org/10.1093/0198285930.003.0005

Series: The Lindahl Lectures

 Summary and Conclusion

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This final chapter provides an evaluation of the cost of capital approach to tax policy analysis. This approach has amply proved its usefulness as a guide to tax reform. While the US tax policy changes of the early 1980s introduced additional barriers to efficient allocation of capital, the Tax Reform Act of 1986 reduced these barriers substantially. Important discrepancies remain, however, between effective tax rates on income from household and business assets (both corporate and non-corporate). Further reduction in these discrepancies presents an important opportunity for increasing the efficiency of capital allocation.

Keywords: capital allocation; capital income taxation; corporate businesses; corporate taxation; household taxation; households; marginal effective tax rates; non-corporate businesses; non-corporate taxation; tax policy; tax rates; US Tax Reform Act of 1986; USA

Chapter.  4934 words. 

Subjects: Public Economics

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