What Do We Know About the Effects of the Tax Cuts and Jobs Act?
On December 22, 2017, the U.S. tax code was dramatically changed when what is commonly referred to as the Tax Cuts and Jobs Act (TCJA) was signed into law. As tax scholars, we have a keen interest in knowing how the TCJA will change the world. On this page, we are posting empirical academic studies that focus on specific provisions of this monumental tax reform.
We plan to update this page as more studies come out. Further, many of these studies are early working papers, and have not been vetted by the peer-review process, so check back regularly for updates.
Many of these articles below I have curated on my own, or others have shown to me. However, if you would like to request that we add your study, please email me at email@example.com. We are only posting studies that are hosted elsewhere (we prefer they be accessible on SSRN), and that are (1) empirical, (2) academic and (3) focus on the TCJA.
Unlocking Trapped Foreign Cash, Investor Types, and Firm Payout Policy
I study whether trapped foreign cash levels and investor type explain variation in US-based multinationals’ payout policy responses to tax-repatriation-driven cash windfalls. To do so, I use the deemed mandatory repatriation of trapped foreign cash included in the 2017 Tax Cuts and Jobs Act (TCJA). I find my measure of the level of “unlocked” trapped foreign cash (UTC) is related to increases in repurchases and dividends observed post-TCJA. Motivated by prior research, I examine whether this increase in payout varies with institutional investor type: transient, dedicated, and quasi-indexers (Bushee 2001). I find that firms with high UTC and low (high) dedicated ownership see an increase (no change) in repurchases post-TCJA. I do not observe similar variation with investor type for dividends. More
Changes in CEO Compensation after the Tax Cuts & Jobs Act and the Impact of Corporate Governance: Initial Evidence
Luna, LeAnn and Schuchard, Kathleen, and Stanley, Danielle
The Tax Cuts and Jobs Act (TCJA) expanded the impact of IRC Section 162(m) by disallowing deductions for any compensation over $1 million paid to top executives. Under prior law qualified performance-based pay was exempt from the $1 million cap. We examine whether TCJA affected compensation decisions in the first year following enactment. More
Stock Repurchases and the 2017 Tax Cuts and Jobs Act
Bennett, Benjamin and Thakor, Anjan and Wang, Zexi
We study the effects of the 2017 Tax Cuts and Jobs Act (TCJA) on repurchases, leverage and investment. The TCJA generatestax windfalls through a repatriation tax cut and a corporate income tax cut. More
Where Is the Opportunity in Opportunity Zones? Early Indicators of the Opportunity Zone Program’s Impact on Commercial Property Prices
Sage, Alan and Langen, Mike and Van de Minne, Alex
In December 2017, the U.S. Congress passed into law the Opportunity Zone (OZ) program, offering significant tax benefits for property investments in designated low-income census tracts. More
Examining the Immediate Effects of Recent Tax Law Changes on the Structure of Executive Compensation
De Simone, Lisa and McClure, Charles and Stomberg, Bridget
We exploit a December 22, 2017 law change to examine the relation between corporate taxes and executive compensation. More
Debt and Taxes? The Effect of TCJA Interest Limitations on Capital Structure
Carrizosa, Richard and Gaertner, Fabio B. and Lynch, Dan
Using a difference-in-differences design, we show that new limitations on the deductibility of interest, enacted as part of the Tax Cuts & Jobs Act of 2017 (TCJA), significantly decrease corporate leverage. More
The Effect of the Tax Cuts and Jobs Act of 2017 on Multinational Firms’ Capital Investment: Internal Capital Market Frictions and Tax Incentives
Beyer, Brooke and Downes, Jimmy F. and Mathis, Mollie E. and Rapley, Eric T
The Tax Cuts and Jobs Act of 2017 (TCJA) imposes a mandatory repatriation tax on multinational firms’ unremitted foreign earnings. More
Making Only America Great? Non-U.S. Market Reactions to U.S. Tax Reform
Gaertner, Fabio B. and Hoopes, Jeffrey L. and Williams, Braden
We study foreign externalities of U.S. tax reform. Specifically, we examine foreign firms’ stock returns around key tax reform events. More
The Magnitude and Accuracy of Companies’ Estimates of the Immediate Financial Statement Impact of the Tax Cuts and Jobs Act
Chen, Shannon and Erickson, Matthew and Harding, Michelle and Stomberg, Bridget and Xia, Junwei
We provide evidence of the final, immediate financial statement impact of some of the major provisions of the 2017 U.S. tax law changes, commonly referred to as the Tax Cuts and Jobs Act (TCJA). More
Shareholder Wealth Effects of Border Adjustment Taxation
Gaertner, Fabio B. and Hoopes, Jeffrey L. and Maydew, Edward L.
Following two decades of discussion, the border adjustment tax briefly emerged as part of proposed U.S. corporate tax reform in early 2017. More