This paper presents estimates of static and dynamic general equilibrium resource allocation effects for four alternative plans for corporate and personal income tax integration in the United States. A medium-scale numerical general equilibrium model is used which integrates the U.S. tax system with consumer demand behavior by household and producer behavior by industry. Results indicate that total integration of personal and corporate taxes would yield an annual static efficiency gain of around $6 billion (1973 dollars). Partial integration plans yield less. Dynamic effects are larger, and our analysis indicates that full integration may yield gains whose present value is as large as $500 billion or about 1.0 percent of the discounted present value of the GNP stream to the U.S. economy after correction for population growth. Plans differ in their distributional impacts, although these findings depend on the nature of replacement taxes used to preserve government revenues. The size of dynamic resource allocation effects is sensitive to the choice of the replacement tax, while static gains are reasonably robust.

This study examines the tax avoidance behavior of firms prior to the issuance, and following the resolution, of SEC tax comment letters. We find that firms that appear to engage in greater tax avoidance are more likely to receive a tax-related SEC comment letter. We also find that firms receiving a tax-related SEC comment letter, relative to firms receiving a non-tax comment letter, subsequently decrease their tax avoidance behavior consistent with an increase in expected tax costs. Additionally, we document evidence consistent with other firms that do not receive a comment letter reacting to multiple publicly disclosed tax-related comment letters within their industry by increasing their reported GAAP ETR, consistent with an indirect effect of regulatory scrutiny on certain types of tax avoidance.