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Corporate Tax Preferences before and after the Tax Cuts and Jobs Act of 2017

Erin Henry and Richard Sansing

Abstract:

We examine the effect of the Tax Cuts and Jobs Act of 2017 (TCJA) on corporate tax preferences and how this effect varies with firm characteristics such as financial performance. We show that the TCJA significantly reduced the extent to which a subsample of profitable firms is tax favored, but it did not change average cash tax differences for the full sample that includes firms with losses. The associations between the tax preferences of profitable firms and their characteristics were generally unaffected by the TCJA. In a sample that includes loss firms, we find that larger firms are less tax favored after the TCJA.

Citation

Erin Henry and Richard Sansing (2020), Corporate Tax Preferences before and after the Tax Cuts and Jobs Act of 2017 , National Tax Journal, 73:4, pp. 1065-1086

DOI: dx.doi.org/10.17310/ntj.2020.4.07