Shareholder Wealth Effects of Border Adjustment Taxation
60 Pages Posted: 24 Apr 2017 Last revised: 21 Jun 2017
Date Written: June 20, 2017
Following two decades of discussion, the border adjustment tax emerged as a serious component of corporate tax reform in early 2017. While heavily debated, little empirical evidence exists regarding the border adjustment tax. We provide evidence on the shareholder wealth effects by examining equity market reactions on days with high attention paid to the proposed tax. Contrary to predictions that the tax would be trade neutral, we find firms in high import industries (e.g., retailers), measured using both aggregate government industry data and firm-level shipping container data, suffer negative returns on days the tax had a greater likelihood of adoption.
Keywords: Border Adjustment Tax, Border Tax, Corporate Tax, Fundamental Tax Reform
JEL Classification: H25, K34
Suggested Citation: Suggested Citation