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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.