Abstract The article presents information on the working paper, The Dynamic Effects of Tax Law Asymmetries, by Alan J. Auerbach. A distinction is made between gains and losses by businesses under U.S. tax law. Carried forward losses are subject to two penalties: a loss of interest and expiration after fifteen years. Previous work focused on the higher expected tax payments that a tax system without full loss offset imposes on risky projects. The author presents an analysis of the impact of taxation on investment when gains and losses are treated asymmetrically. The results provide a basis for analyzing recent tax changes.
Philip J. Harmelink (Sat,) studied this question.