Article ID: | iaor20011851 |
Country: | United States |
Volume: | 106 |
Issue: | 1 |
Start Page Number: | 23 |
End Page Number: | 48 |
Publication Date: | Jul 2000 |
Journal: | Journal of Optimization Theory and Applications |
Authors: | Kort P.M., Wielhouwer J.L., Waegenaere A., De |
Keywords: | taxation |
This paper analyzes the investment policy consequences of incorporating a tax depreciation rate different from the economic depreciation rate. Most often, firms choose their tax depreciation rate in a strategic way. Therefore, it would be a coincidence, should the optimization process lead to a tax depreciation rate that equals the economic depreciation rate. The implications of a difference between tax depreciation rate and economic depreciation rate are investigated in an optimal control model for the determination of the firm investment policy over time.