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INFLATION, TAX RULES, AND THE PRICE OF LAND RELATIVE TO CAPITAL
LOUIS A. ROSE
National Tax Journal
Vol. 39, No. 1 (March, 1986), pp. 59-64
Published by: National Tax Association
Stable URL: http://www.jstor.org/stable/41792158
Page Count: 6
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This paper theoretically explains how fully anticipated inflation interacts with various combinations of income tax rules to affect the price of land relative to capital. Although inflation's interaction with historic cost depreciation tends to raise land's relative price, the use of accelerated depreciation rates and investment tax credits weakens this tendency and the tax on nominal capital gains opposes it. We conclude that inflation can either increase or decrease land's relative price, depending on the tax parameters.
National Tax Journal © 1986 National Tax Association