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1 Scott Greenberg, Cost Recovery for New Corporate Investments in 2012 1 (2016)

handle is hein.taxfoundation/crencorpiv0001 and id is 1 raw text is: TAX FOUNDATION FISCAL FACT Jan. 2016 No. 495 The Tax Foundation is a 501(c)(3) non-partisan, non-profit research institution founded in 1937 to educate the public on tax policy. Based in Washington, DC, our economic and policy analysis is guided by the principles of sound tax policy: simplicity, neutrality, transparency, and stability. @2016 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Melodie Bowler Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Cost Recovery for New Corporate Investments in 2012 By Scott Greenberg Analyst Key Findings Cost recovery refers to the extent to which businesses are able to deduct the full cost of their investments over time. Many economists argue that a system of full cost recovery would be maximally efficient. However, the current U.S. tax code requires corporations to deduct investments over time periods ranging up to 50 years, leading to limited cost recovery. Overall, U.S. corporations will only be able to deduct 87.14 percent of the value of investments made in 2012 over time. If not for bonus depreciation, corporations would only have been able to deduct 83.08 percent of the value of investments made in 2012 over time. The extent of cost recovery varies by industrial sector and by asset, reflecting the numerous depreciation schedules to which different industries and assets are subject. The current system of cost recovery prevents corporations from making investments that would otherwise be profitable under a system of full cost recovery.

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