Using Tax Return Data to Simulate Corporate Marginal Tax Rates

49 Pages Posted: 31 Dec 2007 Last revised: 15 Feb 2008

See all articles by John R. Graham

John R. Graham

Duke University; National Bureau of Economic Research (NBER)

Lillian F. Mills

University of Texas at Austin - McCombs School of Business

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Date Written: December 2007

Abstract

We document that simulated corporate marginal tax rates based on financial statement data (Shevlin 1990 and Graham 1996a) are highly correlated with simulated rates based on corporate tax return data. We provide algorithms that can be used to estimate the book or tax simulated rates when they are not available. We find that the simulated book marginal tax rate does a better job of explaining financial statement debt ratios than does the analogous tax return variable and discuss how the book simulated rate is likely to be an appropriate measure in settings with global, long-term considerations.

Suggested Citation

Graham, John Robert and Mills, Lillian F., Using Tax Return Data to Simulate Corporate Marginal Tax Rates (December 2007). NBER Working Paper No. w13709, Available at SSRN: https://ssrn.com/abstract=1079306

John Robert Graham (Contact Author)

Duke University ( email )

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National Bureau of Economic Research (NBER)

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Lillian F. Mills

University of Texas at Austin - McCombs School of Business ( email )

Austin, TX 78712
United States

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