The Effects of the Length of the Tax-loss Carryback Period on Tax Receipts and Corporate Marginal Tax Rates

Written by: John R. Graham and Hyunseob Kim Abstract We investigate how the length of the net operating loss carryback period affects corporate liquidity and marginal tax rates. We estimate that extending the carryback period from two to five years, as recently proposed in President Obama’s budget blueprint, would provide $19 ($34) billion of additional liquidity to the corporate sector for 2008 (2009). Our calculations imply that the benefits of…