The Effect of 'Invisible' Tax Preferences on Investment and Tax Preference Measures

Posted: 4 Dec 2007 Last revised: 6 Feb 2011

See all articles by Richard C. Sansing

Richard C. Sansing

Tuck School of Business at Dartmouth

Leslie A. Robinson

Dartmouth College - Tuck School of Business; Dartmouth College - Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: May 11, 2007

Abstract

This paper develops and analyzes a model in which tax considerations and financial reporting considerations have countervailing effects on a firm's investments in internally developed intangible assets. It also proposes and estimates a new measure of tax preferences, which we call the economic effective tax rate. This measure reflects both investments in intangible assets and the use of debt financing, neither of which generates a book-tax difference. Our measure indicates that the economic effective tax rate was about 18 percent between 1988 and 2005, when the statutory tax rate was either 34 or 35 percent.

Keywords: intangible assets, tax preferences, effective tax rates, financial reporting costs

JEL Classification: H25, M41

Suggested Citation

Sansing, Richard C. and Robinson, Leslie, The Effect of 'Invisible' Tax Preferences on Investment and Tax Preference Measures (May 11, 2007). Journal of Accounting and Economics, Vol. 46, pp. 389-404, 2008. Available at SSRN: https://ssrn.com/abstract=1050621

Richard C. Sansing (Contact Author)

Tuck School of Business at Dartmouth ( email )

100 Tuck Hall
Hanover, NH 03755
United States
603-646-0392 (Phone)
603-646-1308 (Fax)

Leslie Robinson

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Dartmouth College - Accounting ( email )

100 Tuck Hall
Hanover, NH 03755
United States
603-646-4018 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
565
PlumX Metrics