Just BEAT it do firms reclassify costs to avoid the base erosion and anti-abuse tax (BEAT) of the TCJA?

• 成果类型: Article
• 署名作者: Kelley, Stacie O.; Lewellen, Christina M.; Lynch, Daniel P.; Samuel, David M. P.
• 署名单位: University of Wisconsin System; University of Wisconsin Madison; North Carolina State University; Singapore Management University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2023.101648
• 发表日期: 2024
• 关键词: MULTINATIONAL-CORPORATIONS; reform-act; JOBS Act; US; INVESTMENT; CONSEQUENCES; territorial; management; rates; cuts

摘要

This study empirically examines whether firms reclassify related-party payments to avoid the base erosion and anti-abuse tax (BEAT) of the Tax Cuts and Jobs Act (TCJA). We leverage the BEAT filing threshold and use both a difference-in-differences design among U.S. firms and a tripledifference design utilizing the parent company's location to provide evidence that firms reclassify related-party payments to avoid the BEAT. This effect is stronger in firms with greater preTCJA income shifting incentives. We estimate a $6 billion aggregate reduction in U.S. taxes for our sample firms in 2018. We also examine the consequences of reclassifying related-party payments and find some evidence of an increase in tax reserves and a reduction in internal information quality for firms that engage in cost reclassification to avoid the BEAT. These findings help explain observed BEAT collection shortfalls, contribute to the current policy debate about international tax reform, and document spillover effects of tax policy.