The right to write down capital goods for tax purposes faster than the rate at which they would normally be depreciated. This is intended to encourage investment, as it enables a company to defer its taxes when it invests. Under accelerated depreciation a firm’s profits net of depreciation, and thus its tax liabilities, are lower than they would have been under normal depreciation. Once the capital goods are written off, profits net of depreciation become higher than they would have been under normal depreciation, and the tax bill rises again.