Accounting Papers
Document Type
Journal Article
Date of this Version
4-1981
Publication Source
The Journal of Business
Volume
54
Issue
2
Start Page
227
Last Page
270
Abstract
It is often argued that the failure to use indexation (i.e., the use of historical cost accounting methods) implies that real income tax rates will vary directly with rates of inflation. This substantive effect of mere bookkeeping methods is often predicted even though it is recognized to have some adverse implications. This is the "tax effects of inflation" hypothesis. The major objective of this paper is to examine the descriptive adequacy of this hypothesis using a variety of macro- economic data for the years 1929-74. My empirical results appear to be substantially inconsistent with the tax- effects hypothesis.
Recommended Citation
Gonedes, N. J. (1981). Evidence on the "Tax Effects" of Inflation Under Historical Cost Accounting Methods. The Journal of Business, 54 (2), 227-270. Retrieved from https://repository.upenn.edu/accounting_papers/75
Date Posted: 27 November 2017
Comments
This article is available online at: http://www.jstor.org/stable/2352676