NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

James Poterba, Nirupama Rao, Jeri Seidman

NBER Working Paper No. 12923
Issued in February 2007, Revised in December 2010
NBER Program(s):Corporate Finance, Public Economics

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.

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Document Object Identifier (DOI): 10.3386/w12923

Published: Poterba, James M., Nirupama S. Rao, and Jeri K. Seidman. "Deferred Tax Positions and Incentives for Corporate Behavior Around Corporate Tax Changes." National Tax Journal 64, 1 (March 2011): 27-57. citation courtesy of

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