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Changes in corporate effective tax rates over the past 25 years

Author

Listed:
  • Dyreng, Scott D.
  • Hanlon, Michelle
  • Maydew, Edward L.
  • Thornock, Jacob R.

Abstract

We investigate systematic changes in corporate effective tax rates over the past 25 years and find that effective tax rates have decreased significantly. Contrary to conventional wisdom, the decline in effective tax rates is not concentrated in multinational firms; effective tax rates have declined at approximately the same rate for both multinational and domestic firms. Moreover, within multinational firms, both foreign and domestic effective rates have decreased. Finally, changes in firm characteristics and declining foreign statutory tax rates explain little of the overall decrease in effective rates.

Suggested Citation

  • Dyreng, Scott D. & Hanlon, Michelle & Maydew, Edward L. & Thornock, Jacob R., 2017. "Changes in corporate effective tax rates over the past 25 years," Journal of Financial Economics, Elsevier, vol. 124(3), pages 441-463.
    • Handle: RePEc:eee:jfinec:v:124:y:2017:i:3:p:441-463
    DOI: 10.1016/j.jfineco.2017.04.001
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    More about this item

    Keywords

    Tax; Effective tax rates; Tax avoidance; Time trend; Foreign taxes; Domestic taxes;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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