• Write-Off: The Tax Blog

    What Jobs Do Taxes Do?

    Twice this week, I listened to someone mention the three jobs taxes are intended to do. One of these times was on Lisa De Simone and Bridget Stomberg’s excellent tax podcast, Taxes for the Masses, where they mentioned the canonical three jobs of taxes: 1. Raise revenue to run the government, 2. Redistribute income, and 3. Change taxpayer behavior. These three purposes of taxes are pretty standard, and, extremely useful for thinking about tax policy. I have mentioned them myself many times. But, I would like to propose that there is a fourth purpose of taxes that we should always keep in mind. What is it?
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January 31, 2021

What do we know about CbC Reporting?

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Recent News & Media

Executive Director Profiled by The Well

August 30, 2021

Courtney Knoll, the UNC Tax Center's Executive Director, was recently featured by UNC-Chapel Hill's The Well for her passion in bringing tax education to students. More

Coming Up

Demystifying Blockchain

Monday November 8, 2021

Join us on Monday, November 8 2021 from 11 a.m. to 12:15 p.m. EST for Demystifying Blockchain. This webinar, which provides 2.0 CPE credits, is the fourth in a series of tax policy webcasts jointly hosted by the Kenan Institute-affiliated UNC Tax Center and the AICPA. It will feature a panel of expert academics and practitioners to explore blockchain from a CPA perspective. More

 

TCJA Effects Tracker

How Does Removing the Tax Benefits of Debt Affect Firms? Evidence from the 2017 US Tax Reform

July 01, 2021

Abstract

Despite extensive efforts, the relation between tax incentives and corporate capital structure is an open question. The 2017 US tax reform creates an opportunity to directly estimate this relation. The reform limits the tax advantage of debt for all firms except for small businesses with average sales below $25 million. I use the exception threshold in a regression discontinuity design and show that corporate debt declines nearly dollar for dollar as the present value of the tax benefits of debt shrinks. Treated firms do not raise equity to replace debt, and they decrease investments and hiring, consistent with a rise in the cost of external financing. Confirming the tax channel, treatment effects are stronger in firms with more profits and smaller non-debt tax shields. Comparing the size of the debt tax shield across the firm size distribution suggests that the estimates likely provide a lower bound for the effects in large corporations. More