In 2017, the Trump Administration has made quite a few changes in the U.S. tax systems.

TA06

In 2017, the Trump Administration has made quite a few changes in the U.S. tax systems. One of them is the enactment of The Tax Cut and Job Act (<- LINK TO PDF REPORT BELOW). The changes of the law’s business tax system are as follows:

• Reduces the corporate income tax rate from 35 percent to 20 percent.
• Eliminates the corporate alternative minimum tax.
• Taxes pass-through business income at a maximum rate of 25 percent, subject to anti-abuse rules.
• Allows for capital investment, except for structures, to be fully and immediately deductible for five years, and increases the Section 179 expensing limit from $500,000 to $5 million, with an increased phaseout threshold.
• Limits the deductibility of net interest expense on future loans to 30 percent of earnings before interest, taxes, depreciation, and amortization for all businesses with gross receipts of $25 million or more.
• Restricts the deduction of net operating losses to 90 percent of net taxable income and allows net operating losses to be carried forward indefinitely, increased by a factor reflecting inflation and the real return to capital. Eliminates net operating loss carrybacks.
• Eliminates the domestic production activities deduction (section 199), and other business deductions and credits.
• Creates a territorial tax system, exempting from U.S. tax 100 percent of dividends from foreign subsidiaries.
• Enacts a deemed repatriation of currently deferred foreign profits, at a rate of 12 percent for cash and cash-equivalent profits and 5 percent of all other profits

In TA06, we want to evaluate whether the law help corporations to reduce their tax burden or not. Using the same data base,

Using the same data base, Gap&TransUnionFinancialData, as in TA05, we want to seek for answers for the following questions:

For each of the two companies in the ten-year period, 2012-2021, use Tableau to calculate and display the trends for (a) the provision for income taxes (b) the accrued income taxes, (c) the deferred tax liability, and (d) effective tax rate. Based upon what you find, answer the following questions:

1. What are the effective tax rates for Trans Union Inc. in 2015 and 2019?
2. What are the effective tax rates for Gap in 2015 and 2019?
3. Is Trans Union Inc.’s provision for income tax (a) higher, (b) lower, or (c) roughly the same over the period 2018-2021 than in previous years?
4. Did Trans Union Inc.’s deferred tax liability appear to benefit from the Tax Act?
5. Did Gap’s deferred tax liability appear to benefit from the Tax Act?

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