The Business Cycle and the Deduction for Foreign Derived Intangible Income

Dowd, Tim; Landefeld, Paul

doi:10.17310/ntj.2018.4.07

National Tax Journal

2018

DOI: 10.17310/ntj.2018.4.07

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The Business Cycle and the Deduction for Foreign Derived Intangible Income

Tim Dowd

Paul Landefeld

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Cited by 4 publications

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Designing international tax reform: lessons from TCJA

Herzfeld

2021

Int Tax Public Finance

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The Tax Cuts & Jobs Act (TCJA) introduced the most significant changes to the US international tax system in decades. The law changes have been criticized for reducing equity, benefiting wealthier business owners at the expense of individuals in the long term (while also increasing the deficit) adding to complexity, and creating incentives for shifting profits and activities offshore. These critiques give rise to the question of how best, and under what criteria, to evaluate the changes to the international tax system brought about by the US tax reform. This paper analyzes the tax law changes adopted in the TCJA that impact cross-border investment within the context of several decades of policy proposals that recognized the flaws and deficiencies of the prior system and attempted to develop proposals that balanced creating incentives for the efficient use of capital and the benefits of US investment overseas while minimizing incentives for profit shifting. Reviewing the various provisions of the law in the context of a series of reform proposals made over the previous decade shows the extent to which most of the international law changes introduced by the TCJA closely followed these well-developed ideas. And yet, there appears to be a disconnect between the goals of the law change and the extent to which the laws as enacted have effectuated that change. The divergence provides a cautionary tale for public finance economists wishing to engage in international tax regime change.

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Designing international tax reform: lessons from TCJA

Herzfeld

2021

Int Tax Public Finance

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Did the Tax Cuts and Jobs Act stimulate capital expenditures? A firm-level approach

Bitzan,

Hong,

Huseynov

2023

Applied Economics

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Corporate Behavioral Responses to the Tcja for Tax Years 2017–2018

Dowd¹,

Giosa²,

Willingham³

2020

National Tax Journal

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We analyze the initial corporate response to the 2017 enactment of the “Tax Cuts and Jobs Act” (TCJA). The TCJA changed many corporate tax provisions, including a reduction of the corporate statutory tax rate from 35 percent to 21 percent effective in 2018 and sweeping changes to the taxation of income earned abroad by U.S. corporations. Based on a sample of U.S. corporate tax returns, we find that corporations accelerated deductions into 2017 and delayed income into 2018, thereby minimizing their taxes. We estimate an income and deduction shifting tax elasticity of -0.11 and 0.08, respectively. Additionally, we study detailed tax returns of 81 large corporations to understand how those changes impacted them.

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The Business Cycle and the Deduction for Foreign Derived Intangible Income

Cited by 4 publications

References 5 publications

Designing international tax reform: lessons from TCJA

Designing international tax reform: lessons from TCJA

Did the Tax Cuts and Jobs Act stimulate capital expenditures? A firm-level approach

Corporate Behavioral Responses to the Tcja for Tax Years 2017–2018

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