Corporate Behavioral Responses to TCJA for Tax Years 2017–2018

Dowd, Timothy and Giosa, Christopher P. and Willingham, Thomas, Corporate Behavioral Responses to TCJA for Tax Years 2017–2018 (August 27, 2020). Available at SSRN: https://ssrn.com/abstract=3690447

60 Pages Posted: 30 Oct 2020

See all articles by Tim Dowd

Tim Dowd

Joint Committee on Taxation, U.S. Congress

Christopher P. Giosa

Joint Committee on Taxation

Thomas Willingham

affiliation not provided to SSRN

Date Written: August 27, 2020

Abstract

We analyze the initial corporate response to the 2017 enactment of the “Tax Cuts and Jobs Act” or TCJA. TCJA changed many corporate tax provisions, including a reduction of the corporate statutory tax rate from 35 percent to 21 percent effective in 2018 and sweeping changes to the taxation of income earned abroad by U.S. corporations. Based on a sample of U.S. corporate tax returns, we find that corporations accelerated deductions into 2017 and delayed income into 2018, thereby minimizing their taxes. We estimate an income and deduction shifting tax elasticity of -0.11 and 0.08, respectively. Additionally, we study detailed tax returns of 81 large corporations to understand how those changes impacted them.

Keywords: corporate taxation, international taxation, taxpayer behavioral responses, income shifting

JEL Classification: H2, H3

Suggested Citation

Dowd, Timothy and Giosa, Christopher P. and Willingham, Thomas, Corporate Behavioral Responses to TCJA for Tax Years 2017–2018 (August 27, 2020). Dowd, Timothy and Giosa, Christopher P. and Willingham, Thomas, Corporate Behavioral Responses to TCJA for Tax Years 2017–2018 (August 27, 2020). Available at SSRN: https://ssrn.com/abstract=3690447, Available at SSRN: https://ssrn.com/abstract=3690447 or http://dx.doi.org/10.2139/ssrn.3690447

Timothy Dowd (Contact Author)

Joint Committee on Taxation, U.S. Congress ( email )

Room 503 Ford House Office Building
Washington, DC 20515
United States

Christopher P. Giosa

Joint Committee on Taxation

Room 1625 Longworth House Office Building
Washington, DC 20515
United States
202-225-3621 (Phone)

Thomas Willingham

affiliation not provided to SSRN

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