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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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    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)
    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. Ortmann, Regina & Sureth, Caren, 2014. "Can the CCCTB alleviate tax discrimination against loss-making European multinational groups?," arqus Discussion Papers in Quantitative Tax Research, arqus - Arbeitskreis Quantitative Steuerlehre 165, arqus - Arbeitskreis Quantitative Steuerlehre.
    2. Langenmayr, Dominika & Lester, Rebecca, 2014. "Taxation and Corporate Risk-Taking," Discussion Papers in Economics, University of Munich, Department of Economics 20977, University of Munich, Department of Economics.
    3. Knittel, Matthew J. & Nelson, Susan C., 2011. "How Would Small Business Owners Fare Under A Business Entity Tax?," National Tax Journal, National Tax Association, National Tax Association, vol. 64(4), pages 949-75, December.
    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, National Tax Association, vol. 66(1), pages 239-62, March.
    5. Dominika Langenmayr & Rebecca Lester, 2013. "Taxation and corporate risk-taking," Working Papers, Oxford University Centre for Business Taxation 1316, Oxford University Centre for Business Taxation.
    6. Daniel Dreßler & Michael Overesch, 2013. "Investment impact of tax loss treatment—empirical insights from a panel of multinationals," International Tax and Public Finance, Springer, Springer, vol. 20(3), pages 513-543, June.


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