NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Significance of Tax Law Asymmetries: An Empirical Investigation

Rosanne Altshuler, Alan J. Auerbach

NBER Working Paper No. 2279 (Also Reprint No. r1384)
Issued in June 1987
NBER Program(s):   PE

This study uses tax return data for U.S. nonfinancial corporations for the period 1971-82 to estimate the importance of restrictions on the ability of firms to use tax credits and to obtain refunds for tax losses. Our results suggest that the incidence of such unused tax benefits increased substantially during the early 1980s, though we do not find these increases attributable to increased investment incentives during that period. Using estimates of a three-state (taxable, not taxable, partially taxable) transition probability model, we calculate the effective tax rates on various types of investments undertaken by firms differing with respect to tax status. We confirm previous findings about the marginal tax rate on interest payments, and that it is important to distinguish current tax payments from marginal tax rates in estimating the incentive to invest.

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Document Object Identifier (DOI): 10.3386/w2279

Published: The Quarterly Journal of Economics, Vol. 105, pp. 63-86, (1990). citation courtesy of

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