The Effect of U.S. Tax Reform on the Tax Burdens of U.S. Domestic and Multinational Corporations

Dyreng, Scott D.; Gaertner, Fabio B.; Hoopes, Jeffrey L.; Vernon, Mary E.

doi:10.2139/ssrn.3620102

Cited by 13 publications

(11 citation statements)

References 19 publications

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“…Overall, our results in regard to estimated ASTR and BTD ASTR are consistent with observations of CASH ETR values and with the discussion in Dyreng et al (2020). Our empirical analysis shows that estimated ASTR values capture the statutory tax rate decline, and our BTD ASTR estimates quantify the net tax base avoidance effect of the TCJA tax provisions.…”

Section: Astr and Btd Astr Around The Tax Cuts And Jobs Act (Tcja) Of 2017supporting

confidence: 88%

“…First, it is evident that CASH ETR is fairly constant for 2012 to 2017, with a reduction in 2018 and 2019, which means the net effect of TCJA is a decrease in CASH ETR, consistent with Dyreng et al (2020). Second, estimated ASTR values capture the decrease in the STRUS of the tax reform.…”

Section: Astr and Btd Astr Around The Tax Cuts And Jobs Act (Tcja) Of 2017mentioning

confidence: 71%

“…Knowledge of ASTR allows for a new specification of book-tax differences to quantify tax base avoidance. We define the variable BTD ASTR as pretax book income minus taxable income, 4 minimum tax, the increase in bonus depreciation) (Auerbach, 2018;Dyreng et al, 2020). We find that ASTR decreased drastically after TCJA, while BTD ASTR remained relatively unchanged.…”

Section: Introductionmentioning

confidence: 86%

“…Multiple business deductions were limited, and the domestic production activities deduction was eliminated increasing the tax base. Other tax code changes, for example, the elimination of the corporate alternative minimum tax and the increase in bonus depreciation (Auerbach, 2018;Dyreng et al, 2020) decreased the tax base.…”

Section: Astr and Btd Astr Around The Tax Cuts And Jobs Act (Tcja) Of 2017mentioning

confidence: 99%

“…We also omit TCJA transition years before the TCJA was fully implemented (i.e., observations with fiscal years ending between December 2017 and November 2018, as suggested by Dyreng et al (2020)). Our resulting sample contains 3,715 domestic-only firms with 29,652 firm-year observations.…”

Section: Astr and Btd Astr Around The Tax Cuts And Jobs Act (Tcja) Of 2017mentioning

confidence: 99%

See 4 more Smart Citations

Measuring corporate tax rate and tax base avoidance of U.S. Domestic and U.S. multinational firms

Lampenius

Shevlin

Stenzel

2021

Journal of Accounting and Economics

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We develop an approach based on publicly available data to decompose and quantify tax avoidance into two separate components: tax rate avoidance and tax base avoidance. Our measures are based on the average statutory tax rate, which accounts for the statutory tax rates across all transactions of a firm. We illustrate and validate our measures using simulation data, the Tax Reform Act of 1986, the Tax Cuts and Jobs Act of 2017, changes in tax rate avoidance and tax base avoidance across time, bonus depreciation time periods, several sample splits of U.S. multinational and domestic firms, differences across industries, and firms operating in tax haven locations. The measures allow regulators and researchers to gain insights into these two conceptually different tax avoidance strategies.

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Section: Astr and Btd Astr Around The Tax Cuts And Jobs Act (Tcja) Of 2017supporting

confidence: 88%

Section: Astr and Btd Astr Around The Tax Cuts And Jobs Act (Tcja) Of 2017mentioning

confidence: 71%

Section: Introductionmentioning

confidence: 86%

Section: Astr and Btd Astr Around The Tax Cuts And Jobs Act (Tcja) Of 2017mentioning

confidence: 99%

Section: Astr and Btd Astr Around The Tax Cuts And Jobs Act (Tcja) Of 2017mentioning

confidence: 99%

See 3 more Smart Citations

Measuring corporate tax rate and tax base avoidance of U.S. Domestic and U.S. multinational firms

Lampenius

Shevlin

Stenzel

2021

Journal of Accounting and Economics

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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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The initial effect of U.S. tax reform on foreign acquisitions

Amberger

Robinson

2023

Rev Account Stud

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The Tax Cuts and Jobs Act (TCJA) of 2017 marked a significant change in U.S. domestic and international tax policy, altering incentives for U.S. firms to own foreign assets. We examine the initial response of U.S. firms’ foreign acquisition patterns to the TCJA’s key reform provisions. We find a significant overall decrease in the probability that a foreign target is acquired by a U.S. firm after the reform, suggesting that the net effect of the TCJA was to reduce acquisitions abroad. Cross-sectional variation across target and acquirer characteristics points to the elimination of the repatriation tax and the TCJA’s global intangible low-taxed income (GILTI) regime as critically influencing cross-border acquisitions by U.S. firms. Specifically, U.S. acquirers with little foreign presence prior to the TCJA are more likely to acquire a foreign target, while U.S. acquirers are less likely to acquire profitable targets in low-tax countries. Results from our empirical analyses are consistent with the TCJA prompting fewer but more value-enhancing, less tax-motivated foreign acquisitions by U.S. firms.

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The Effect of U.S. Tax Reform on the Tax Burdens of U.S. Domestic and Multinational Corporations

Cited by 13 publications

References 19 publications

Measuring corporate tax rate and tax base avoidance of U.S. Domestic and U.S. multinational firms

Measuring corporate tax rate and tax base avoidance of U.S. Domestic and U.S. multinational firms

Designing international tax reform: lessons from TCJA

The initial effect of U.S. tax reform on foreign acquisitions

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