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The Problem with Bonus Depreciation

3 Pages Posted: 16 Feb 2010 Last revised: 19 Feb 2010

Theodore P. Seto

Loyola Law School Los Angeles

Date Written: February 12, 2010

Abstract

Bonus depreciation encourages businesses to reallocate funds from labor to capital and thereby depresses the demand for labor. In periods of high unemployment, Congress should avoid enacting such provisions. More generally, when considering proposed tax incentives, Congress should insist on identifying the subsidized activity’s economic substitutes – those sectors or activities as to which the proposed provisions are likely to operate as a penalty.

Suggested Citation

Seto, Theodore P., The Problem with Bonus Depreciation (February 12, 2010). Tax Notes, pp. 782-783, February 8, 2010; Loyola-LA Legal Studies Paper No. 2010-5. Available at SSRN: https://ssrn.com/abstract=1552134

Theodore P. Seto (Contact Author)

Loyola Law School Los Angeles ( email )

919 Albany Street
Los Angeles, CA 90015-1211
United States
213-736-1154 (Phone)
213-380-3769 (Fax)

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