Christine Tan is an Associate Professor in Accounting at Hunter College, CUNY.
Paper: “Corporate Lobbying and Disclosure of Deferred Tax Liabilities from Permanently Reinvested Foreign Earnings” (with Devra Golbe and Renee Weiss)
Abstract: This paper examines the correlation between corporate tax lobbying activity and the voluntary disclosure of the estimated tax liability associated with permanently reinvested foreign earnings (PREs). We draw on the literature that suggests that lobbying can lower taxes on repatriated foreign earnings and lower corporate effective tax rates overall. We examine whether companies voluntarily disclose the estimated tax liability of permanently reinvested earnings as another means outside of the formal political process to lobby Congress to lower corporate taxes on repatriated earnings. Using data from Open Secrets and companies’ XBRL (eXtensible BUsiness Reporting) filings, we find that companies that engage in the formal lobbying process are also more likely to voluntarily disclose the estimated tax liability of PREs. Our findings are timely and relevant to Congress who recently passed the Tax Cuts and Jobs Act, and the Financial Accounting Standards Board as it reaches its final decisions on tax-related disclosure effectiveness.