Date of Award


Document Type


Degree Name

Doctor of Philosophy (PhD)




In 1981, Congress passed the Economic Recovery Tax Act of 1981 (ERTA). One of the major provisions of ERTA is the Accelerated Cost Recovery System (ACRS) of depreciation. ACRS allows for a more rapid recovery of the cost of a depreciable asset than existed under prior law. At the federal level, this accelerated cost recovery is expected to result in substantial revenue loss. The benefit of the revenue loss is a hoped for stimulation to capital investment to spur economic recovery. During the deliberations leading to the enactment of ERTA, much attention was focused on this revenue loss at the federal level. Little attention, however, was directed toward the revenue impact on states whose tax base conformed to the federal tax base. This study examines the revenue impact of the ACRS provisions on the State of Florida corporate tax revenues for the years 1982-1985. The examination makes use of both state data and national data. First, a Florida / U.S. model is constructed by relating Florida taxable income to U.S. taxable income for each industry represented in the sample of Florida corporate tax returns. This model allows for the use of national investment information. At the national level, a determination is made of expected investment for each industry represented in the Florida / U.S. model, for the years 1982-1985. Depreciation calculations are made for this investment, by industry, under pre-ERTA law and under ACRS. The difference in depreciation, again by industry, is translated to the state level by use of the relationships established in the Florida / U.S. model. At the state level, the change in depreciation is multiplied by the 5% state corporate tax rate. The result of this procedure in the gross revenue impact to the State of Florida caused by the ACRS provisions. This gross revenue impact is reduced to a net figure for the years 1982-1984 by the emergency excise tax. The emergency excise tax was enacted by the Florida legislature in an effort to negate the anticipated revenue loss from the ACRS provisions. This excise tax expires after 1984.