The role of leasing in the effectiveness of corporate tax policy evidence from the 2002 bonus depreciation Jongsang Park and Sukha Shin
By: Park, Jongsang
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Contributor(s): Shin, Sukha.
Material type: 
ArticlePublisher: 2020Subject(s): ARRENDAMIENTO FINANCIERO | SOCIEDADES | INVERSIONES EMPRESARIALES | PLANIFICACION FISCAL | MODELOS ECONOMETRICOS
In:
FinanzArchiv v. 76, n. 2, June 2020, 121-145Summary: Firms can use capital that they either purchase or lease, but these alternatives are treated differently for tax purposes. This paper derives the demand for leased capital as a function of tax parameters, and uses the model to estimate the responsiveness of leasing to the 2002 bonus depreciation, finding strong evidence that depreciation allowances influence leasing patterns. Firms that stood to benefit the least from depreciation allowances were the most likely to lease capital during the temporary bonus depreciation period. Specifically, we find that a lessee with a marginal tax rate of zero increases the fraction of leased investment by up to 10 percentage points during the period, compared to a fully taxed lessee.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 207/2020/2-1 (Browse shelf) | Available | OP 207/2020/2-1 |
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Firms can use capital that they either purchase or lease, but these alternatives are treated differently for tax purposes. This paper derives the demand for leased capital as a function of tax parameters, and uses the model to estimate the responsiveness of leasing to the 2002 bonus depreciation, finding strong evidence that depreciation allowances influence leasing patterns. Firms that stood to benefit the least from depreciation allowances were the most likely to lease capital during the temporary bonus depreciation period. Specifically, we find that a lessee with a marginal tax rate of zero increases the fraction of leased investment by up to 10 percentage points during the period, compared to a fully taxed lessee.
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