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

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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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© 1993 Springer-Verlag Berlin · Heidelberg

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Buchholz, W., Richter, W.F. (1993). Tax Deductibility of Economic Depreciation to Ensure Invariant Valuations: The Johansson-Samuelson Theorem Reconsidered. In: Diewert, W.E., Spremann, K., Stehling, F. (eds) Mathematical Modelling in Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-78508-5_8

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  • DOI: https://doi.org/10.1007/978-3-642-78508-5_8

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-78510-8

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