Deferred tax positions and incentives for corporate behavior around corporate tax changes

James M. Poterba, Nirupama S. Rao, Jeri K. Seidman

Research output: Contribution to journalArticle

Abstract

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.

Original languageEnglish (US)
Pages (from-to)27-58
Number of pages32
JournalNational Tax Journal
Volume64
Issue number1
StatePublished - Mar 2011

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Deferred taxes
Incentives
Corporate tax
Short-run
Firm behavior
Tax reform
Corporate tax rates
Tax rate
Political economy
Tax

Keywords

  • Book-tax differences
  • Deferred tax
  • Revaluation
  • Tax policy

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Deferred tax positions and incentives for corporate behavior around corporate tax changes. / Poterba, James M.; Rao, Nirupama S.; Seidman, Jeri K.

In: National Tax Journal, Vol. 64, No. 1, 03.2011, p. 27-58.

Research output: Contribution to journalArticle

Poterba, JM, Rao, NS & Seidman, JK 2011, 'Deferred tax positions and incentives for corporate behavior around corporate tax changes', National Tax Journal, vol. 64, no. 1, pp. 27-58.
Poterba, James M. ; Rao, Nirupama S. ; Seidman, Jeri K. / Deferred tax positions and incentives for corporate behavior around corporate tax changes. In: National Tax Journal. 2011 ; Vol. 64, No. 1. pp. 27-58.
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