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The Implications Of Tax Asymmetry For U.S. Corporations

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  • Cooper, Michael G.
  • Knittel, Matthew J
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    Abstract

    This paper examines the implications of the asymmetric treatment of tax losses for U.S. corporations for 1993–2004. We find that partial refunding of tax losses reduces their real values by approximately one-half and produces modest effective tax rate differentials between taxable and non-taxable firms. However, if firms use debt financing or utilize an investment tax credit, then rate differentials can be significant. We also find that certain industries and younger firms disproportionately bear the negative consequences of partial refunding, due to either delayed realization or the inability to use tax losses to offset prior or future profits.

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    Bibliographic Info

    Article provided by National Tax Association in its journal National Tax Journal.

    Volume (Year): 63 (2010)
    Issue (Month): 1 (March Citation: 63 National Tax Journal 33-61 (March 2010))
    Pages: 33-61

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    Handle: RePEc:ntj:journl:v:63:y:2010:i:1:p:33-61

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    Cited by:
    1. Dominika Langenmayr & Rebecca Lester, 2013. "Taxation and corporate risk-taking," Working Papers 1316, Oxford University Centre for Business Taxation.
    2. Knittel, Matthew J. & Nelson, Susan C., 2011. "How Would Small Business Owners Fare Under A Business Entity Tax?," National Tax Journal, National Tax Association, vol. 64(4), pages 949-75, December .
    3. Daniel Dreßler & Michael Overesch, 2013. "Investment impact of tax loss treatment—empirical insights from a panel of multinationals," International Tax and Public Finance, Springer, vol. 20(3), pages 513-543, June.
    4. Cronin, Julie Anne & Lin, Emily Y. & Power, Laura & Cooper, Michael, 2013. "Distributing The Corporate Income Tax: Revised U.S. Treasury Methodology," National Tax Journal, National Tax Association, vol. 66(1), pages 239-62, March Cit.

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