Tax Policy and Organizational Form: Assessing the Effects of the Tax Cuts and Jobs Act of 2017

Posted: 24 May 2018 Last revised: 1 Dec 2018

See all articles by Erin Henry

Erin Henry

University of Memphis

George A. Plesko

University of Connecticut School of Business

Steven Utke

University of Connecticut - Department of Accounting

Date Written: July 23, 2018

Abstract

We provide historical context to assess the implications of the Tax Cuts and Jobs Act of 2017 (TCJA) on organizational form. We review the Tax Reform Act of 1986 (TRA86) to assess the extent of organizational form changes in response to changing tax incentives and the effects of those organizational form changes on business operations. We develop a simple analytic model to provide insight into the incentives created by the TCJA and briefly summarize practitioner observations regarding the incentives affecting organizational form decisions. Results suggest that an array of factors make the organizational form decision more difficult and less predictable than in 1986.

Keywords: organizational form, pass-through, corporate tax, tax rates

JEL Classification: H25, K34

Suggested Citation

Henry, Erin and Plesko, George A. and Utke, Steven, Tax Policy and Organizational Form: Assessing the Effects of the Tax Cuts and Jobs Act of 2017 (July 23, 2018). National Tax Journal, Vol. 71, No. 4, 2018. Available at SSRN: https://ssrn.com/abstract=3177463 or http://dx.doi.org/10.2139/ssrn.3177463

Erin Henry (Contact Author)

University of Memphis ( email )

Memphis, TN
United States
9012403746 (Phone)

George A. Plesko

University of Connecticut School of Business ( email )

School of Business
Storrs, CT 06269-2041
United States
860-486-6421 (Phone)

Steven Utke

University of Connecticut - Department of Accounting ( email )

School of Business
Storrs, CT 06269-2041
United States

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