Yoram Margalioth (Tel Aviv University Law School) has published Not a Panacea for Economic Growth: The Case of Accelerated Depreciation, 26 Va. Tax Rev. 493 (2007).  Here is the Conclusion:

U.S. tax policy in the past fifty years has closely followed Evsey Domar’s advice in a 1953 paper: “Given the choice between a lower tax rate with normal depreciation, or a higher rate with accelerated depreciation, I would, except in severe inflation, certainly recommend the latter.” In this paper, I beg to differ. I argue that much like another influential paper by Domar, promoting investment as a panacea for economic growth — a paper that is now generally acknowledged to have misguided the World Bank and the IMF in their aid policy for the past fifty years — so has his 1953 paper misguided U.S. domestic tax policy, though to a smaller degree.

The key to U.S. economic growth is not additional capital investment. Having more machines and structures will increase output level, but machines have diminishing marginal returns and the additional tax-induced investment comes at the cost of forgone current consumption (that is, reduced welfare) or at the cost of diversion from other forms of investment or growth promoting policies, such as reducing the corporate tax rate.

Government intervention is necessary in the economics of ideas as the social rate of return on the marginal investment in innovation is much higher than the private rate of return. Such intervention allows innovators to charge fees above marginal cost, in order to recoup their fixed investment during the R&D phase and to make a profit.

Assuming markets are competitive, efficient investment in machinery will take place with no government intervention because the private return equals the social return. There seems to be no robust economic theory supported by strong evidence to justify U.S. government intervention in the market for capital goods. Nevertheless, accelerated depreciation is the foundation of U.S. tax policy. It is time to give it a closer look.