Discussion of Initial Operational Changes by Small and Medium Size Businesses in Response to the Tax Cuts and Jobs Act (TCJA) 2017

Abstract

Congress and the president enacted the landmark Tax Cuts and Jobs Act (TCJA) on December 22, 2017, the most sweeping change to the tax law since 1986. Tax laws such as this have a major impact on how business is conducted in the United States. This study does not attempt a comprehensive analysis of the changes in the U.S. tax code, but instead focuses on some key areas that affect most small and medium size business operators. Specifically this study examines how TCJA (2017) affects business operators in areas such as depreciation, net interest expenses, and entertainment. The Internal Revenue Service (IRS) has been continuously issuing facts sheets and statements in regards to the TCJA (2017). The first half of this study is a brief literature review on the landmark changes to the U.S. tax for corporations in regards to depreciation, net interest expenses, and entertainment. The second half of this study is a report of field observations and discussions with business operators such as a landlord of apartment complexes, a hotel operator, and a physical therapist. Though this study does not provide macro or archival data to explain how business operators responded to the TCJA (2017), field observations and discussions suggest that the three business operators are renovating in response to full depreciation write off, reducing net interest expenses, and limiting entertainment expenses.