Implications of Tax Loss Asymmetry for Owners of S Corporations

• 成果类型: Article
• 署名作者: Goodman, Lucas; Patel, Elena; Saunders-Scott, Molly
• 署名单位: United States Department of the Treasury; Utah System of Higher Education; University of Utah; Congressional Budget Office
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.20200311
• 发表日期: 2023
• 页码: 342-369
• 关键词: debt

摘要

We study tax loss asymmetry for S corporate owners. These own-ers use most losses contemporaneously, reducing the tax asymmetry compared to C corporations. However, these owners face distor-tions due to the progressive individual tax schedule. The value of this asymmetry is approximately $3.5 billion per year. We find that this asymmetry creates disincentives for risky investment and causes allocative inefficiencies among loss and gains owners. Finally, we simulate the effects of certain provisions of the Tax Cuts and Jobs Act; we estimate that these provisions-especially section 199A -reduce the behavioral distortions of the asymmetry for S corporate owners. (JEL D22, G32, H25, H32, K34)