C and S Corporation Banks: Did Trump's Tax Reform Lead to Differential Effects?

35 Pages Posted: 6 Dec 2021

See all articles by Hoang Ha Nguyen Thi

Hoang Ha Nguyen Thi

Goethe University Frankfurt

Alfons J. Weichenrieder

Goethe University Frankfurt - Department of Applied Econometrics and International Economic Policy; Vienna University of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: November 30, 2021

Abstract

The US Tax Cuts and Jobs Act (TCJA) led to a drastic reduction in the corporate tax and improved the treatment of C corporations compared to S corporations. We study the differential effect of the TCJA on these types of corporations using key economic variables of US banks, such as the number of employees, average salaries and benefits, profit/loss before taxes, and net income. Our analysis suggests that the TCJA increased the net-of-tax profits of C corporation banks compared to S corporations and, to a lesser extent, their pre-tax profits. At the same time, the reform triggered no significantly differential effect on the employment and average wages.

Keywords: Tax Cuts and Jobs Act, corporate taxation, S corporations, C corporations, banks

JEL Classification: H2, G2

Suggested Citation

Nguyen Thi, Hoang Ha and Weichenrieder, Alfons J., C and S Corporation Banks: Did Trump's Tax Reform Lead to Differential Effects? (November 30, 2021). SAFE Working Paper No. 328, Available at SSRN: https://ssrn.com/abstract=3976165 or http://dx.doi.org/10.2139/ssrn.3976165

Hoang Ha Nguyen Thi

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Alfons J. Weichenrieder (Contact Author)

Goethe University Frankfurt - Department of Applied Econometrics and International Economic Policy ( email )

United States

HOME PAGE: http://www.uni-frankfurt.de/fb02/weichenrieder/

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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