Austin Frerick (MPA ’14) co-authored a paper about how the corporate tax base has changed during recent years. Frerick and Laura Power, both in the U.S. Department of the Treasury’s Office of Tax Analysis, used micro-economic tax return data from 1992 to 2013 to compute the first time-series on the normal return fraction for all nonfinancial C corporations, for multinationals, and for industries.
Their computations suggest that the difference between an income tax base and a cash flow tax base has been decreasing. Industries that hold intangible assets have above-average supra-normal returns, they said in the soon-to-be published report in the National Tax Journal.
“The returns attributable to intangible income are difficult to value and so can be subject to income tax base erosion,” Frerick and Power wrote. “A cash flow tax could provide a viable solution.”
They are currently working on a follow-up to the piece that uses the same methodology but focusing on pass-through entities. They hope to publish it this fall as an official Treasury report.
A first-generation college student, Frerick received his bachelor’s degree from Grinnell College in Iowa. He was a project assistant for UW-Madison’s Institute for Research on Poverty while at the La Follette School. He joined the Treasury Department in May 2015 after starting his career at the Congressional Research Service.