Corporate Behavior and the Tax Cuts and Jobs Act

How has the U.S. Tax Cuts and Jobs Act of 2017 changed corporate behavior? In addition to reducing the corporate income tax rate to a flat 21 percent from a high of 35 percent, the TCJA changed other important rules on earnings stripping, expensing and depreciating, net operating losses, and the taxation of foreign subsidiaries. These changes generally reduced the effective and marginal tax rates of U.S. corporations. Using the first set of post-TCJA 10-K reports, our analysis seeks to provide a preliminary assessment of the extent to which these benefits have motivated corporations to do what TCJA proponents hoped.… Read more