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Tax Deductibility of Economic Depreciation to Ensure Invariant Valuations: The Johansson-Samuelson Theorem Reconsidered

  • Wolfgang Buchholz
  • Wolfram F. Richter

Abstract

S.-E. Johansson (1961) and P. A. Samuelson (1964) have shown that allowance has to be made for economic depredation if, and only if, the present value of a cash-receipt stream develops through time independently of the marginal income tax rate. By substituting valuation invariance across time by one across tax brackets a related and more powerful version is derived.

Keywords

Cash Flow Interest Income Investment Income Irreversible Investment Valuation Invariance 
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Copyright information

© Springer-Verlag Berlin · Heidelberg 1993

Authors and Affiliations

  • Wolfgang Buchholz
    • 1
  • Wolfram F. Richter
    • 2
  1. 1.Department of EconomicsUniversity of RegensburgGermany
  2. 2.Department of EconomicsUniversity of DortmundGermany

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