Equities | Fiscal Policy | US
On the 22 December 2017, President Trump signed into law the Tax Cuts and Jobs Act (TCJA). This ‘unified framework for comprehensive tax reform’ was the first broad overhaul of the US tax code in thirty years. Expectations were that it would have major financial consequences for firms, however, its breadth and speedy inception made exact predictions hard.
This paper, a collaboration between authors from the University of Zurich and Harvard, uses financial statements released in 2018 to quantify accurately the benefits and losses to individual firms. They do this by comparing effective tax rates (ETRs) before and after the reforms, as well as measuring changes to nonrecurring taxes. On this front, the authors find the following:
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