Tax Policy:

1988 and 1989 Company Effective Tax Rates Higher Than in Prior Years

GGD-92-111: Published: Aug 31, 1992. Publicly Released: Sep 19, 1992.

Additional Materials:


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request, GAO reviewed the effects of the Tax Reform Act of 1986 on large company tax rates, focusing on: (1) effective tax rates for 1988 and 1989; and (2) reasons for low or high effective tax rates.

GAO found that: (1) between 1986 and 1989, average U.S. effective tax rates increased by 72.6 percent, from 18.6 percent in 1986 to 32.9 percent in 1989; (2) by 1989, the average worldwide large company and industry tax rate increased to 37.1 percent; (3) the difference between the average U.S. effective tax rate and the statutory rate declined; (4) by 1989, the dispersion of company and industry U.S. effective tax rates narrowed; (5) the number of companies with U.S. effective tax rates below 10 percent decreased, while companies above the statutory rate increased significantly; (6) the act was expected to increase corporate taxable income relative to pretax accounting income, but data limitations prevent a direct link between the act and higher U.S. effective tax rates; (7) the 14.3-percent increase in the average U.S. effective tax rate may be temporary, due to the balancing and reversal of previous deferred taxes; and (8) the high rates partially result from previously deferred taxes attributable to installment sales, long-term contracts, and investment tax credits.

Jan 30, 2018

Dec 20, 2017

Dec 18, 2017

Nov 30, 2017

Nov 28, 2017

Sep 6, 2017

May 18, 2017

May 17, 2017

Apr 27, 2017

Apr 26, 2017

Looking for more? Browse all our products here