In July 2020, the UK government reduced the VAT rate on hospitality services from 20% to 5% as an emergency policy intervention. Using a novel dataset of detailed hotel room characteristics in UK and elsewhere, we estimate how much the tax cut was passed on to consumers via a price reduction. We...

We estimate the effects of personal income tax decreases on financial well-being, including qualitative subjective assessments and quantitative measures. A plausibly causal design shows that tax decreases in the Tax Cuts and Jobs Act made survey respondents more likely to say they were “living...

The Tax Cuts and Jobs Act of 2017 (TCJA) changed tax policy in two important aspects. It limited state and local tax deductions (SALT) to $10,000 and lowered marginal tax rates in most income brackets. In this analysis, I estimate house price time series models for 20 U.S. cities using...

Regulators increasingly express concerns over auditor-provided tax services (APTS) because those services could impair auditor independence. To date, research on the impact of APTS on auditor independence has yielded mixed results, potentially due to endogeneity issues, providing no clear...

Taxpayers who take advantage of the Code’s exclusions, deductions, and preferential rates implicitly “vote” on the shape of American society. Pre-TCJA, the Code enfranchised “aspirational” taxpayers who sought to own homes in flourishing neighborhoods, to educate their offspring, and...

The 2017 US tax legislation - widely referred to as the Tax Cut and Jobs Act (TCJA) - fundamentally transformed the US system of international taxation. It ostensibly ended worldwide taxation but introduced, for instance, a new tax on "Global Intangible Low-Taxed Income" (GILTI). This paper...

We evaluate Germany's temporary value-added tax (VAT) rate reduction as a tool to stimulate consumer spending during the Covid-19 pandemic using a comparative case study approach. We construct a credible counterfactual for Germany in a two-step procedure. First, we carry out a careful...

We document a strong empirical connection between corporate taxation and the manufacturing labor share, both in the US and across OECD countries. Our estimates associate 30 percent to 60 percent of the observed decline in labor shares with the fall in corporate taxation. Using an equilibrium...

We evaluate Germany's temporary value-added tax (VAT) rate reduction as a tool to stimulate consumer spending during the Covid-19 pandemic using a comparative case study approach. We construct a credible counterfactual for Germany in a two-step procedure. First, we carry out a careful...

Could temporary tax cuts stimulate consumer spending? Sector-specific measures to the COVID-19 pandemic provides a quasi-experimental variation in consumption patterns to infer a causal effect of tax policy changes. Using a novel dataset of daily debit and credit card transactions, this paper...

Does a reduction in the tax rate trigger investments in developing countries? This paper answers this question in a difference in difference framework. Using firm-level data on Indian manufacturing firms I study the impact of the 2019 and 2020 Indian tax reform that reduced the corporate income...

We exploit the 2017 US tax reform to learn about the tax-competitiveness of US multinational corporations (MNCs) relative to their international peers. Matching on the propensity score, we compare pairs of similar US and European firms listed on the S&P500 or StoxxEurope600 in a...

Does a reduction in the corporate income tax rate trigger investments in developing countries? This paper answers this question in a difference in differences framework. Using firm-level data on Indian manufacturing firms I study the effect of the 2019 and 2020 Indian tax reform that reduced the...

We exploit the 2017 US tax reform to learn about the tax-competitiveness of US multinational corporations (MNCs) relative to their international peers. Matching on the propensity score, we compare pairs of similar US and European firms listed on the S&P500 or StoxxEurope600 in a...

The Tax Cuts and Jobs Act removed the repatriation tax on the accumulated foreign profits of U.S. firms, effective January 1, 2018. Overnight, this unlocked as much as $1.7 trillion in new liquidity for U.S. multinationals. Using a difference-in-differences approach, we examine the real and...

Nearly every state incorporates the federal tax code into its individual income tax system. This widespread incorporation has many supporters and has been justified on the basis that it is necessary in order for states to have a simple and efficient tax system. This article explores the...

Goods producers increase their capital expenditure and employment in response to a cut in marginal corporate income tax rates or an increase in investment tax credits. In contrast, companies in the service sector mostly use any tax windfall to increase dividend payouts. We base our conclusions...

Abstract. U.S. corporate tax cuts have become less expansionary since the mid-1980s. Using general equilibrium models with corporate financial allocations, we show that rising share buybacks render corporate tax cuts less expansionary. Although buybacks increase shareholders’ and...

This paper investigates the extent to which the GILTI (global intangible low-taxed income) tax and FDII (foreign-derived intangible income) deduction affect how U.S. multinational firms’ investment and income shifting strategies change after the 2017 Tax Cuts and Jobs Act (the Act). Overall,...

This study examines the effect of the 2017 Tax Cuts and Jobs Act (TCJA) on capital investment, labor investment, and the productivity of foreign subsidiaries of U.S. multinational corporations (MNCs). Proponents of the TCJA argue it decreased foreign investment by leveling the playing field...

We study the aggregate and distributional consequences of replacing corporate profit taxes with shareholder taxes, namely taxes on dividends and capital gains, in a setting with incomplete markets and heterogeneity at both the household and the firm level. The reform yields distributional gains...

In this article, Clarke and Fox examine the American Rescue Plan Act’s restrictions on state tax cuts, arguing that the restrictions are a variation on more familiar maintenance-of-effort provisions. These provisions are common, and are designed to help ensure that federal grants supplement...

This paper studies the impact of a place-based tax credit policy, the Opportunity Zone program created under the Tax Cuts and Jobs Act of 2017, on local private investments and entrepreneurship. Using a difference-in-differences approach and comparing census tracts designated as Opportunity...

This paper uses a general equilibrium model to simulate both the effects of a preferential capital-gains tax rate on total income tax revenues and the effects of a revenue-neutral substitution between a capital gains preference and marginal income tax rates on economic efficiency and the...

This paper estimates the effect of payroll tax cuts on firm activity during economic downturns. We use two regional payroll tax cuts in Finland as well as the onset of the Great Recession to estimate the effect of the recession on firms treated by the payroll tax cuts compared to a similar...

The Tax Cut and Jobs Act (TCJA) slashed corporations’ median effective tax rates from 31.7% to 20.8%. Nevertheless, 15% of firms experienced an increase. One fifth of firms recorded nonrecurring tax costs or benefits exceeding 3% of total assets. Proxies that existing studies employ to assess...

In this paper, we test the old view and the new view of dividend taxation using a new set of evidence from a unique event. Using a multiple regression discontinuity (MRD) setting from the 2015 tax reform in South Korea, we find that investors react positively to the news of an anticipated...

The 2017 Tax Cuts and Jobs Act (TCJA) sharply reduced effective corporate income tax rates on equity-financed US investment. This paper examines the reform’s impact on US inbound foreign direct investment (FDI) and investment in property, plant and equipment (PPE) by foreign-owned US...

With the current high inflation, bracket creep is back on the agenda. The federal government has introduced a bill to compensate for this effect, among other things, by shifting income tax brackets. In the debate on bracket creep, the point of reference is very important. Results differ greatly...

The 2017 Tax Cuts and Jobs Act (TCJA) sharply reduced effective corporate income tax rates on equity-financed US investment. This paper examines the reform's impact on US inbound foreign direct investment (FDI) and investment in property, plant and equipment (PPE) by foreign-owned US companies....

The 2017 Tax Cut and Jobs Act reduced the US corporate tax rate and introduced provisions to curb profit shifting. We combine survey data, tax data, and firm financial statements to study the evolution of the geographical allocation of US firms' profits after the reform. The share of profits...