Corporate tax rate changes are an incentive for high marginal tax (HMT) firms to shift taxable income into a period of lower tax rates. The Tax Reform Act of 1986 (TRA 86) reduced the top corporate statutory rate for ordinary income from 46% to 34%, and increased the corporate rate on net...

The results of this study indicate that a likely reason why a negative relation between estimated implicit taxes and pretax returns is empirically observed is the researcher’s election to choose a zero tax rate as the benchmark state and local tax rate. Normally, an observed negative relation...