Recent research provides evidence that corporate tax departments and tax directors have incentives to reduce financial statement effective tax rates, but little or no incentive to reduce cash taxes paid. The lack of managerial incentives to reduce cash taxes paid provides a stark contrast to the...

We examine the extent of implicit taxes at the corporate level and the effect on implicit taxes of the Tax Reform Act of 1986 (TRA86). Using a variety of specifications, we find consistent evidence that implicit taxes eliminate virtually all of the cross-sectional differences in explicit tax...