Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/59249

The Effects of the Tax Cuts & Jobs Act of 2017 on Defined Benefit Pension Contributions

File Size Format  
HARC 2019 paper 25.pdf 382.7 kB Adobe PDF View/Open

Item Summary

Title:The Effects of the Tax Cuts & Jobs Act of 2017 on Defined Benefit Pension Contributions
Authors:Gaertner,Fabio
Lynch, Daniel
Vernon, Mary
Keywords:pensions
tax incentive
tax reform
Date Issued:02 Aug 2018
Abstract:This study examines the effect of the Tax Cuts & Jobs Act of 2017 (TCJA) on corporate defined benefit pension contributions. The TCJA is the most significant tax reform since 1986. One of the primary changes to the tax code is the decrease of the corporate tax rate from 35% in 2017 to 21% in 2018. This change incentivizes firms to increase 2017 pension contributions to take advantage of tax deductions at a higher rate. Consistent with this incentive, we find firms increase defined benefit pension contributions by an average of 27% in 2017 compared to earlier years. We also find that taxpaying firms are the primary contributors, consistent with the rate reduction driving our results. Further, taxpaying firms with high levels of deferred tax assets contribute over four times as much as taxpaying firms with low levels of deferred tax assets, suggesting the re-valuation of deferred tax assets is an important factor in the decision to contribute. Additional evidence suggests the increase in pension contributions in 2017 represents an acceleration of future contributions rather than a permanent increase in pension funding.
URI:http://hdl.handle.net/10125/59249
Appears in Collections: 08 Taxation


Please email libraryada-l@lists.hawaii.edu if you need this content in ADA-compliant format.

Items in ScholarSpace are protected by copyright, with all rights reserved, unless otherwise indicated.