Deferred Tax Positions and Incentives for Corporate Behavior Around Corporate Tax Changes

James M. Poterba, Nirupama Rao and Jeri K. Seidman

National Tax Journal, 2011, vol. 64, issue 1, 27-57

Abstract: 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 effects of tax rate changes on reported earnings. Recognizing these divergent incentives is important for understanding the political economy of corporate tax reform.

Date: 2011
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Working Paper: Deferred Tax Positions and Incentives for Corporate Behavior Around Corporate Tax Changes (2007)
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