Date of Graduation

5-2024

Document Type

Thesis

Degree Name

Bachelor of Science

Degree Level

Undergraduate

Department

Accounting

Advisor/Mentor

Jarnigan, Robyn

Abstract

The Tax Cuts and Jobs Act (TCJA) of 2017 marked a significant overhaul of the United States tax system, promising to stimulate economic growth and enhance the competitiveness of American businesses. Amidst its broad-reaching reforms, the TCJA introduced several provisions directly impacting small businesses, aiming to alleviate their tax burdens and foster entrepreneurial activity. This thesis endeavors to evaluate the multifaceted effects of the TCJA on small businesses, examining its implications for their financial performance, investment behavior, and overall economic contribution.

Preliminary findings suggest that the TCJA has produced a generally positive result for small businesses. On one hand, reduced corporate tax rates and the introduction of the Qualified Business Income Deduction (QBID) have provided significant tax relief for certain small businesses, enabling them to retain more earnings and invest in growth initiatives. Conversely, complexities in tax planning and compliance, coupled with uncertainties surrounding certain provisions, have presented challenges for small business owners navigating the new tax landscape. Also, the TCJA included provisions labeled as “revenue-neutral”, which were focused on offsetting some of the lost federal income tax revenue. These changes increased the tax burden on some small businesses, but generally had a more significant impact on larger corporations. The TCJA’s taxpayer friendly depreciation amendments through bonus depreciation and the section 179 expense deduction also decreased small businesses tax liability and therefore freed up more capital. The overall impact of the TCJA on small businesses and their owners was a decreased tax burden, which led to reinvestment in their businesses and spurred overall economic growth.

Keywords

Tax Cuts and Jobs Act (TCJA); economics; tax code; corporate tax rate; tax liability; unemployment

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