Monday, July 22, 2019

Students of corporate tax rates might have seen a front-page article in the Wall Street Journal today exploring how the tax cuts of 2017 have changed effective tax rates for large public filers.

We certainly noticed the article — because it’s based on Calcbench data!

Of course we’re flattered that the Journal would rely on us for their calculations. Calcbench has been tracking corporate tax disclosures, including effective tax rates and the adjustments that filers make to arrive at those numbers, for years. You can find them using the standardized metrics we offer on our Company-in-Detail and Multi-Company databases; or by searching text disclosures in our Interactive Disclosure page.

We recommend reading the full article, but the heart of the tale is told in these lines:

[Q1 2019] marked the third straight quarter [with median tax rates] below 20 percent, and is consistent with the goals and structure of the tax overhaul, which lowered the federal corporate rate to 21 percent from 35 percent. The law’s authors wanted to help U.S. multinationals compete in foreign markets and aid domestic companies with high tax burdens, while reducing the value of tax breaks and making it harder to achieve single-digit tax rates.

Much of the decline is coming because fewer firms are paying rates at the highest end, according to the Journal analysis.

Throughout 2018 and 2019, Calcbench has looked at specific examples of that trend. We found some firms with much higher effective rates during transitional periods in 2018; we found other firms with effective rates that plummeted; and still more firms whose effective rates have kinda sorta stayed flat. You can search our blog for “tax reform” and find a long list of posts on the subject.

One fine point: The WSJ article did include a line, “Companies typically don’t make public what they pay the Internal Revenue Service each tax year.”

Calcbench actually does track “Income Taxes Paid” from the Statement of Cash Flows. That is the amount of money a filer hands over to the IRS in a given fiscal year. It’s not the same as Provision for Income Taxes on the income statement, since that provision can include all sorts of deferred items or other adjustments.

But Calcbench has you covered for all things tax, no matter how specific you want to be. We got the data.

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