Using Tax Return Data to Simulate Corporate Marginal Tax Rates

John R. Graham and Lillian Mills

No 13709, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We document that simulated corporate marginal tax rates based on financial statement data (Shevlin 1990 and Graham 1996a) are highly correlated with simulated rates based on corporate tax return data. We provide algorithms that can be used to estimate the book or tax simulated rates when they are not available. We find that the simulated book marginal tax rate does a better job of explaining financial statement debt ratios than does the analogous tax return variable and discuss how the book simulated rate is likely to be an appropriate measure in settings with global, long-term considerations.

JEL-codes: G32 H25 M41 (search for similar items in EconPapers)
Date: 2007-12
New Economics Papers: this item is included in nep-acc and nep-pub
Note: CF PE
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Published as Using tax return data to simulate corporate marginal tax rates Author(s): Graham J R, Mills L F Journal: Journal of Accounting & Economics, Dec 2008, Volume: 46 Issue: 2 pp.366-388 (23 pages)

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Journal Article: Using tax return data to simulate corporate marginal tax rates (2008)
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