IDEAS home Printed from https://ideas.repec.org/p/fip/fednls/87291.html
   My bibliography  Save this paper

Tax Reform and U.S. Effective Profit Taxes: From Low to Lower

Author

Abstract

The Tax Cuts and Jobs Act (TCJA) reduced the federal corporate profit tax rate from 35 percent to 21 percent. Adding in state profit taxes, the overall U.S. tax rate went from 39 percent, one of the highest rates in the world, to 26 percent, about the average rate abroad. The implications of the new law for U.S. competitiveness depend on how these statutory tax rates compare with the actual rates faced by U.S. and foreign companies. To address this question, this post presents new evidence on tax payments as a share of profits, as well as analytical measures of tax impacts on profitability. We find that the U.S. effective tax rate was already below the average rate abroad prior to enactment of the TCJA, and that it is now well below the rate in most countries.

Suggested Citation

  • Matthew Higgins, 2018. "Tax Reform and U.S. Effective Profit Taxes: From Low to Lower," Liberty Street Economics 20181022, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87291
    as

    Download full text from publisher

    File URL: https://libertystreeteconomics.newyorkfed.org/2018/10/tax-reform-and-us-effective-profit-taxes-from-low-to-lower.html
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chang, Juin-Jen & Kuo, Chun-Hung & Lin, Hsieh-Yu & Yang, Shu-Chun S., 2023. "Share buybacks and corporate tax cuts," Journal of Economic Dynamics and Control, Elsevier, vol. 151(C).

    More about this item

    Keywords

    Competitiveness; Corporate Taxes; Profits;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednls:87291. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.