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The Declining Cash Effective Tax Rates of US Domestic Firms

Kimberly S. Krieg & John Li

Advances in Taxation2024https://doi.org/10.1108/s1058-749720240000031001book-chapter
AJG 2ABDC B
Weight
0.61

Abstract

We examine why Cash ETRs of US domestic firms have decreased over time. Using samples from two periods – an early period (1994–1998) and a late period (2011–2015) – we regress Cash ETRs in each period on a set of explanatory variables, and allow coefficients to differ across time periods. We find that, when coefficients are allowed to differ, there is no longer a decline in the unexplained portion of Cash ETR across the two periods, and that the previously observed decline is associated with a change in the relation between firm size and Cash ETR between the two periods. Further analysis suggests that the coefficient on firm size has been declining over the past 20 years, and that controlling for this time trend alone is sufficient to explain the declining trend in Cash ETRs for domestic firms.

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https://doi.org/https://doi.org/10.1108/s1058-749720240000031001

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@article{kimberly2024,
  title        = {{The Declining Cash Effective Tax Rates of US Domestic Firms}},
  author       = {Kimberly S. Krieg & John Li},
  journal      = {Advances in Taxation},
  year         = {2024},
  doi          = {https://doi.org/https://doi.org/10.1108/s1058-749720240000031001},
}

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Evidence weight

0.61

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.76 × 0.4 = 0.31
M · momentum0.55 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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