If the tax management hypothesized in this paper exists, i.e., tax-motivated cross-state allocations of premiums and losses in the statutory reports filed with state officials, then the coefficients on the tax variables should not be negative if the tests are conducted using a set of insurers that file with only one state. Forced to report all premiums and losses from all underwriting in a single state, these insurers could not avail themselves of a tax management strategy that requires multistate filings. Column F reports the results from estimating the regression equation using 180 insurers who only underwrite in their state of incorporation and are unaffiliated with any insurers in other states. Electronic Payday Loans Online

When the sample is restricted to single-state insurers (Column F), the tax coefficients are positive, though not significantly different from zero. The failure to find significantly negative tax coefficients using single-state insurers provides further evidence that multistate insurers are reducing taxes through manipulation of Schedule T. The absence of a negative sign on ETR in Column F’s results implies multistate insurers enjoy a competitive advantage, compared with single-state insurers, because they can access a tax reduction strategy unavailable to single-state insurers.

However, the results from the single-state regression must be interpreted cautiously. Unlike the multistate estimates, none of the coefficients on the explanatory variables, except RATEREG, is significantly different from zero. The poor specification is consistent with both inadequate power from the smaller single-state insurer sample and unspecified differences in the price determinants of multistate and single-state insurers. In particular, the known price determinants, which serve as explanatory variables in this study, largely come from analyses of multistate insurers. Thus, the single-state tests only provide qualified support of income shifting through multistate allocations.