Bonus Depreciation Tax Cut Unlikely To Provide Effective Economic Stimulus
End Notes
[1] Mark Zandi, testimony before the House Committee on Small Business hearing titled, “Economic Stimulus For Small Business: A Look Back and Assessing need for Additional Relief,” July 24, 2008. Bang-for-the-buck estimates reflect the resulting change in Gross Domestic Product in the year after spending occurs.
[2] Darrel S. Cohen and Jason Cummins, “A Retrospective Evaluation of the Effects of Temporary Partial Expensing,” Federal Reserve Board, Finance and Economics Discussion Series Working Paper No. 2006-19, April 2006.
[3] Congreasional Budget Office, “Options for Responding to Short-Term Economic Weakness”, Statement of Peter R. Orszag, Director, before the United States Senate Committee on Finance, January 22, 2008, citing Christopher House and Matthew Shapiro, Temporary Investment Tax Incentives: Theory with Evidence from Bonus Depreciation, NBER Working Paper 12514 (Cambridge, Mass.: National Bureau of Economic Research, September 2006).
[4] Congreasional Budget Office, “Optoins for Responding to Short-Term Economic Weakness”, Statement of Peter R. Orszag, Director, before the United States Senate Committee on Finance, January 22, 2008, http://www.senate.gov/~finance/hearings/testimony/2008test/012208potest.pdf.
[5] Peter Orszag, Director of the Congressional Budget Office, “Economic Stimulus”, January 22, 2008, http://cboblog.cbo.gov/?p=57.
[6] Goldman Sachs Weekly, September 21, 2007.
[7] Assuming the bonus depreciation measure is the same as the one enacted in the Economic Stimulus Act 2008.
[8] See “The Four Pieces of Effective Fiscal Stimulus: Unemployment Insurance, State Relief, Food Stamps, and Tax Refunds”, Center on Budget and Policy Priorities, January 14, 2008. For a detailed discussion of principles for fiscal stimulus, see Chad Stone and Kris Cox, “Economic Policy in a Weakening Economy”, Center on Budget and Policy Priorities, revised January 17, 2008.