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SCI LIBRARY

Same Thing: Depreciation

Joseph Thompson



[Reprinted from an undated pamphlet, Simple Talks on Taxation, published by the author]


... You was sayin', while ago, that the land ought to pay all the taxes.
… No. I said the public should collect what yon might call Tax-rent or Rent-tax . . . the full rental value of the site or area. But no tax on improvements.
… You call land "site or area" as though it was only so many feet by so many feet.
… Well, what's wrong with that?
… But s'pose a feller had some land and he had to build a bulkhead or lay a spur track or grade part of it, that'd add value, wouldn't it?
… Not to the land as a site. Those would be improvements, wouldn't they?
… Yeah. But he couldn't take 'em away, and nobody'd pay him for 'em if he couldn't sell the land.
… Well, it's safe to say that he wouldn't put them in if he didn't need to, and expected to use them for a long time.
… What's that go to do with it? If he had to get out and couldn't sell 'em with the land, he'd lose what they cost.
… Are you sure?
… Why wouldn't I be sure?
… He might lose a part, but they'd be improvements, wouldn't they?
… What difference does that make?
… Well, you're business man enough to know what depreciation is, aren't you?
… I sure am.
… What is it, then?
… Why, it's anynl'y writin' off part of the cost of improvement.
… So he'd only lose the balance he hadn't written off.
… Wel-ll ...
… So, strictly speaking, if he had to get out after, say, twenty years, his improvements would be written off and he could abandon them.
… He wouldn't want to. They might still have some sale value.
… Or they might be an encumbrance that the new owner would have to get rid of.
… Not always.
… No. He wouldn't want to abandon them and in moat cases, just the same as now, he could sell them. And whatever he got would be velvet, in an accounting sense.
… I s'pose so.
… If he had to get out under present conditions he'd be in just as tough a spot as he would under Tax-rent or Rent-tax.
… Well, you always work it 'round so you come out on the right side. I wish you was as good about somethin' important, like who's gonna lick who in the fights tonight.