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1 Michael Schuyler, Comparing the Growth and Revenue Effects of Four Proposed Depreciation Systems: Baucus, Camp, Wyden, and Full Expensing 1 (2014)

handle is hein.taxfoundation/taxfaaf0001 and id is 1 raw text is: Tx                       Comparing the Growth and Revenue
FOUNDATION               Effects of Four Proposed Depreciation
Systems: Baucus, Camp, Wyden, and
Full Expensing
Jun. 2014
No. 43                   By Michael Schuyler
Fe ow
Key Findings
* This paper provides a side-by-side comparison of the long-run growth
and revenue effects of the cost recovery systems in the Baucus proposal,
the Camp plan, the Wyden-Coats proposal, and full expensing.
* The cost recovery proposals of Baucus, Camp, and Wyden would
lengthen asset lives and score as increases in federal revenue on a static
basis. However, when accounting for economic growth, each proposal
would actually lose revenue in the long run due to lower growth.
* Lengthening the lives of capital assets worsens the anti-investment bias
in the tax code and leads to lower investment, lower productivity, lower
wages, and slower economic growth.
* The Baucus cost recovery system would decrease GDP by 2.53 percent,
the capital stock by 7.08 percent, wages by 2.16 percent, jobs by 449,500,
and federal revenues $63.3 billion after accounting for growth effects
(compared to an estimated increase of $31.3 billion on a static basis).
* The Camp cost recovery system would decrease GDP by 1.18 percent, the
capital stock by 3.35 percent, wages by 1.01 percent, jobs by 206,000, and
federal revenue by $26.4 billion (compared to an estimated increase of
$17.4 billion on a static basis).
* The Wyden cost recovery system would decrease GDP by 1.91 percent,
the capital stock by 5.39 percent, wages by 1.64 percent, jobs by 338,100,
and federal revenue by $43.3 billion (compared to an estimated increase
of $28.2 billion on a static basis).
* Full expensing would increase GDP by 5.13 percent, lift the capital
stock by 15.4 percent, raise wages by 4.36 percent, create 885,300 jobs,
and boost federal revenue by $121.3 billion (compared to an estimated
decrease of $60.5 billion on a static basis).

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