Given a wealth-maximization model, even a permanent change in the rate of business taxation has no unique direction of effect on business investment. By applying formulations of Jorgenson, Hall and Jorgenson, and Coen, it can be shown that an increase in the rate of business income taxation would raise the rate of business investment to the extent that capital-goods prices are expected to rise and there is a high present value to each dollar of depreciation applied for tax purposes. It seems quite possible, with recent inflation and the major liberalization of tax depreciation over the last two decades, that these conditions were being met.