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C and S corporation banks: Did Trump's tax reform lead to differential effects?

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  • Thi, Hoang Ha Nguyen
  • Weichenrieder, Alfons J.

Abstract

The US Tax Cuts and Jobs Act (TCJA) led to a drastic reduction in the corporate tax and improved the treatment of C corporations compared to S corporations. We study the differential effect of the TCJA on these types of corporations using key economic variables of US banks, such as the number of employees, average salaries and benefits, profit/loss before taxes, and net income. Our analysis suggests that the TCJA increased the net-of-tax profits of C corporation banks compared to S corporations and, to a lesser extent, their pre-tax profits. At the same time, the reform triggered no significantly differential effect on the employment and average wages.

Suggested Citation

  • Thi, Hoang Ha Nguyen & Weichenrieder, Alfons J., 2021. "C and S corporation banks: Did Trump's tax reform lead to differential effects?," SAFE Working Paper Series 328, Leibniz Institute for Financial Research SAFE.
    • Handle: RePEc:zbw:safewp:328
    DOI: 10.2139/ssrn.3976165
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    References listed on IDEAS

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    More about this item

    Keywords

    Tax Cuts and Jobs Act; corporate taxation; S corporations; C corporations; banks;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • G2 - Financial Economics - - Financial Institutions and Services

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