Last month we had a post about effective tax rates under tax reform, and the counterintuitive trend of higher effective tax rates thanks to this year’s one-time “deemed repatriation” tax. In many instances, those effective rates are well above the old statutory rate of 35 percent.

This week Qwest Corp. filed its annual report for 2017, and it provides a clear example of the opposite: how tax reform can push a company’s effective tax rate much lower. Let’s take a look.

First, Qwest is not subject to the deemed repatriation tax, because it has no overseas operations. So no trouble there.

Second, Qwest does have a pile of deferred tax liabilities on the balance sheet. As we noted in another post several weeks ago, deferred tax liabilities result from underpayment of taxes sometime in the company’s past. That means you owe those taxes sometime in the future. Tax reform, however, cut the statutory corporate tax rate from 35 to 21 percent — so those deferred tax liabilities become much less painful, recalculated against that lower future rate.

For Qwest, the reassessment of its deferred tax liabilities resulted in a tax benefit of $555 million. It also translates into a big cut in the company’s effective tax rate. When you include a few other small items, Qwest’s tax rate drops from 35 to 7.5 percent. You can see the reconciliation, below.

That $555 million tax benefit, meanwhile, gets reported on the income statement. Qwest’s tax payment dropped from $678 million in 2016 to only $134 million in 2017. That, in turn, goosed the company’s net income by 53 percent, to $1.66 billion — even though revenue at Qwest actually fell 6.6 percent, from $6.25 billion to $5.83 billion.

We’ll continue to keep an eye on tax reform in its many-splendored glory. This is just one example of the insight you can find in the data by using Calcbench.