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

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Jan. 2016
No. 495

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Cost Recovery for New Corporate

Investments in 2012

By  Scott   Greenberg

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

    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

    The current system of cost recovery prevents corporations from making
    investments that would otherwise be profitable under a system of full cost

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