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Land Gains, Fast Write-Off, and Incentives to Build

Once upon a time each building was written off from taxable income over something purporting to approximate its economic life. Then Congress and the industry began implementing the Commons variation of the George principle. They began shortening tax lives and steepening the gradient of depreciation paths. The light broke on most of us with the speed of a crepuscular Yukon sunrise, but finally it dawned that this was turning the income tax into a sort of “graded tax plan” whereby the income from depreciable buildings was taxed at a lower rate than the income imputable to (or derived from) non-depreciable land.
Paper presented to 23d Annual Conference, Committee on Taxation, Resources and Economic Development, Cambridge, Sept. 1985. Pp. 1-22.

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