IMPACTS OF THE CAPITAL EXPENDITURE LAWS IN THE TAX CUT AND JOBS ACT

Abstract

The Tax Cut and Jobs Act of 2017 (TJCA) created fundamental changes to the tax structure in the United States for individuals and corporations. This paper analyzes one facet of the TCJA’s changes: the change to capital expenditure law. Under the new capita l expenditure rules companies can record the full value of capital purchased from 2018 to 2022 as an expense immediately rather than having to change, my study finds depreciate the expenditure overtime. Despite this tax law that capital expenditures did not significantly change after the passing of the TCJA. This result was likely found because companies chose not to purchase capital that they did not need solely for the purpose of taking a tax deduction. Furthermore, I find that corporations did not fundamentally change their tax planning strategies after the passing of the TCJA in general. However, I do find that than they needed. As a result, investors ex pected companies to purchase m ore capital investors’ valuation of capital expenditures was not as positive after the TCJA as it was from the TCJA, analyze before the new tax law passed. My paper discuss s the actual impacts of the la w, and then propose es s the expected results alternative explanations as to why I did not find results consistent with my hypotheses.