50 Pages Posted: 23 Feb 2007
Date Written: February 2007
A firm's deferred tax position can influence how it is affected by a transition from one tax regime to another. We compile disaggregated deferred tax position data for a sample of large U.S. firms between 1993 and 2004 to explore how these positions might affect firm behavior before and after a pre-announced change in the statutory corporate tax rate. Our results suggest that the heterogeneous deferred tax positions of large U.S. corporations create substantial variation in the short-run effect of tax rate changes on reported earnings. Recognizing these divergent incentives is important for understanding the political economy of corporate tax reform.
Suggested Citation: Suggested Citation
Poterba, James M. and Rao, Nirupama and Seidman, Jeri K., Deferred Tax Positions and Incentives for Corporate Behavior Around Corporate Tax Changes (February 2007). NBER Working Paper No. w12923. Available at SSRN: https://ssrn.com/abstract=964886