C and S corporation banks: Did Trump's tax reform lead to differential effects?

Hoang Ha Nguyen Thi and Alfons Weichenrieder

No 328, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

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 (search for similar items in EconPapers)
JEL-codes: G2 H2 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:328

DOI: 10.2139/ssrn.3976165

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