The Tax Cuts and Jobs Act: Which Firms Won? Which Lost?

Alexander Wagner, Richard Zeckhauser and Alexandre Ziegler

No 14950, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The Tax Cut and Jobs Act (TCJA) slashed corporations’ median effective tax rates from 31.7% to 20.8%. Nevertheless, 15% of firms experienced an increase. One fifth of firms recorded nonrecurring tax costs or benefits exceeding 3% of total assets. Proxies that existing studies employ to assess the TCJA’s impacts account for just half of actual impacts. Stock prices impounded those proxies during the legislative process. Total impacts were impounded the following year, once firms published their financials. These results indicate that investors find it hard to predict even large and immediate changes to company cash flows due to unfamiliar events.

Keywords: Corporate taxes; Tax cuts and jobs act; Event study; Market efficiency; Tax reform (search for similar items in EconPapers)
JEL-codes: G12 G14 H25 O24 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (8)

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Working Paper: The Tax Cuts and Jobs Act: Which Firms Won? Which Lost? (2020)
Working Paper: The Tax Cuts and Jobs Act: Which Firms Won? Which Lost? (2020)
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