Deferred Tax Positions And Incentives For Corporate Behavior Around Corporate Tax Changes
A firm’s deferred tax position can influence how it is affected by a transition from one tax regime to another. We compile disaggregated deferred tax position data for a sample of large U.S. firms between 1993 and 2004 to explore how these positions might affect firm behavior before and after a pre-announced change in the statutory corporate tax rate. Our results suggest that the heterogeneous deferred tax positions of large U.S. corporations create substantial variation in the short-run effects of tax rate changes on reported earnings. Recognizing these divergent incentives is important for understanding the political economy of corporate tax reform.
Volume (Year): 64 (2011)
Issue (Month): 1 (March)
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- James Poterba & Nirupama Rao & Jeri Seidman, 2007. "Deferred Tax Positions and Incentives for Corporate Behavior Around Corporate Tax Changes," NBER Working Papers 12923, National Bureau of Economic Research, Inc.
- Plesko, George A., 2004. "Corporate Tax Avoidance and the Properties of Corporate Earnings," National Tax Journal, National Tax Association, vol. 57(3), pages 729-37, September.
- Myron S. Scholes & G. Peter Wilson & Mark A. Wolfson, 1992. "Firms' Responses to Anticipated Reductions in Tax Rates: The Tax Reform Act of 1986," NBER Working Papers 4171, National Bureau of Economic Research, Inc.
- Mills, Lillian F., 2006. "Five Things Economists and Lawyers Can Learn from Accountants: An Illustration Using the Domestic Production Activities Deduction," National Tax Journal, National Tax Association, vol. 59(3), pages 585-97, September.
- Douglas Shackelford & Joel Slemrod & James Sallee, 2011. "Financial reporting, tax, and real decisions: toward a unifying framework," International Tax and Public Finance, Springer, vol. 18(4), pages 461-494, August.
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