Incentive

Capital (architecture)

Labour economics

Philosophy

Financial capital

Microeconomics

Tax policy

Depreciation (economics)

Tax credit

Accounting

Archaeology

Economics

Market economy

Ad valorem tax

Tax reform

Consumption of fixed capital

Politics

Taxable income

Political science

Monetary economics

Public economics

Human capital

Capital formation

Corporate tax

Tax avoidance

Theology

Investment (military)

Profit (economics)

Generosity

History

Journal of Public Economics

Accelerated depreciation policies decrease the cost of new investments by allowing firms to deduct the new investments from their taxable income more quickly. Countries around the world use these policies to stimulate business investment. To date, almost all empirical evidence of the effect of these policies relies on cross-industry variation in their generosity. Using a modified difference-in-differences framework, this paper estimates the effects of state adoption of federal accelerated depreciation policies on the U.S. manufacturing sector. The results based on this alternative source of quasi-experimental variation reinforce findings from the cross-industry literature and suggest that accelerated depreciation policies have large and significant effects on capital investment.

The effect of tax incentives on U.S. manufacturing: Evidence from state accelerated depreciation policies