A change in corporate tax law such that depreciation is based on current replacement cost would ________ government saving and probably ________ private business saving.

Question

Quizplus · Accepted Answer

If depreciation is based on current replacement cost, it would decrease government saving because companies will be able to deduct more of the cost of their assets from their taxable income in the short term, reducing tax revenue. On the other hand, private businesses would probably increase their saving because they would have to replace their assets more frequently to maintain their depreciation deduction, leading to a higher need for savings.

A Change in Corporate Tax Law Such That Depreciation Is