Is New Code Section 199A Really Going to Turn Us All into Independent Contractors?

7 Pages Posted: 19 Jan 2018 Last revised: 27 Mar 2019

See all articles by Shu-Yi Oei

Shu-Yi Oei

Duke University School of Law

Diane M. Ring

Boston College - Law School

Date Written: January 12, 2018


There has been a lot of interest lately in new IRC Section 199A, the new qualified business income (QBI) deduction that grants passthroughs, including qualifying workers who are independent contractors (and not employees), a deduction equal to 20% of a specially calculated base amount of income. One of the important themes that has arisen is its effect on work and labor markets, and the notion that the new deduction creates an incentive for businesses to shift to independent contractor classification. A question that has been percolating in the press, blogs, and on social media is whether new Section 199A is going to create a big shift in the workplace and cause many workers to be reclassified as independent contractors.

Is this really going to happen? How large an effect will tax have on labor markets and arrangements? We think that predicting and assessing the impact of this new provision is a rather nuanced and complicated question. There is an intersection of incentives, disincentives and risks in play among various actors and across different legal fields, not just tax. Here, we provide an initial roadmap for approaching this analysis. We do so drawing on academic work we have done over the past few years on worker classification in tax and other legal fields.

For an updated and expanded analysis of these issues, see Oei & Ring, "Tax Law's Workplace Shift," forthcoming, Boston University Law Review (2020),

Keywords: Worker classification, Taxation, Section 199A, tax reform, independent contractor, future of work, employment law, labor law

JEL Classification: H20, H24, H25, H27, H29, J00, J32, J80, J83, K20, K23, K31, K34

Suggested Citation

Oei, Shu-Yi and Ring, Diane M., Is New Code Section 199A Really Going to Turn Us All into Independent Contractors? (January 12, 2018). Boston College Law School Legal Studies Research Paper, Available at SSRN: or

Shu-Yi Oei (Contact Author)

Duke University School of Law ( email )

Box 90360
Durham, NC 27708-0360
United States

Diane M. Ring

Boston College - Law School ( email )

885 Centre Street
Newton, MA 02459-1163
United States

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