Measuring Corporate Tax Rate and Tax Base Avoidance of U.S. Domestic and U.S. Multinational Firms

76 Pages Posted: 17 May 2019 Last revised: 24 Mar 2021

See all articles by Niklas Lampenius

Niklas Lampenius

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Terry J. Shevlin

University of California-Irvine

Arthur Stenzel

University of St. Gallen

Date Written: March 23, 2021

Abstract

We develop an approach based on publicly available data to decompose and quantify tax avoidance into two separate components: tax rate avoidance and tax base avoidance. Our measures are based on the average statutory tax rate, which accounts for the statutory tax rates across all transactions of a firm. We illustrate and validate our measures using simulation data, the Tax Reform Act of 1986, the Tax Cuts and Jobs Act of 2017, changes in tax rate avoidance and tax base avoidance across time, bonus depreciation time periods, several sample splits of U.S. multinational and domestic firms, differences across industries, and firms operating in tax haven locations. The measures allow regulators and researchers to gain insights into these two conceptually different tax avoidance strategies.

Keywords: Tax Avoidance, Tax Rate Avoidance, Tax Base Avoidance, Average Statutory Tax Rates, Effective Tax Rates

JEL Classification: G38, H25, H26, H32

Suggested Citation

Lampenius, Niklas and Shevlin, Terry J. and Stenzel, Arthur, Measuring Corporate Tax Rate and Tax Base Avoidance of U.S. Domestic and U.S. Multinational Firms (March 23, 2021). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=3374548 or http://dx.doi.org/10.2139/ssrn.3374548

Niklas Lampenius

University of Hohenheim - Faculty of Business, Economics and Social Sciences ( email )

Stuttgart, 70593
Germany

Terry J. Shevlin (Contact Author)

University of California-Irvine ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States
2065509891 (Phone)

Arthur Stenzel

University of St. Gallen ( email )

Tigerbergstrasse 9
Saint Gallen, St. Gallen CH-9000
Switzerland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
487
Abstract Views
3,132
rank
73,046
PlumX Metrics