THE TAX CUTS AND JOBS ACT AND ITS IMPACT ON AUTOMATION AND ARTIFICIAL INTELLIGENCE

Open Access
Author:
Chiappa, Christopher John
Area of Honors:
Accounting
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Barbara Yener, Thesis Supervisor
  • Samuel Bonsall , Honors Advisor
Keywords:
  • Tax Cuts and Jobs Act
  • TCJA
  • Automation
  • Artificial Intelligence
  • Taxes
  • Accounting
  • Unemployment
  • Depreciation
  • Corporate Tax Rate
Abstract:
The Tax Cuts and Jobs Act of 2017 (TCJA) is a major change to the United States Internal Revenue Code, the tax law that governs individuals and businesses. The Act is the largest and most significant of its kind since 1986, when the IRC was last modified to this extent. The overall purpose of the TCJA is to provide tax relief to all taxpayers, stimulate the economy, and create jobs. The most well known provision is the reduction of income tax rates, particularly the corporate tax rate. There has been much public discussion on the economic effects of the tax rate cut and other major provisions. Although its results are difficult to measure in the early stages of its implementation, some indicators point toward economic growth with more money in the hands of taxpayers. A more in-depth analysis of the TCJA in the context of current technological trends reveals other possible impacts. The U.S. is now experiencing rapid growth in automation and artificial intelligence in many industries, and the TCJA provides incentives for additional investments in productive assets. This, together with the full employment environment, leads me to predict that the new tax plan will ultimately translate to the deployment of more automation and artificial intelligence. In this paper I examine major factors and trends that are currently driving growth in automation and AI, key provisions of the TCJA that create incentives to invest, and the status of the U.S. economy and unemployment rate which establishes conditions under which companies may be faced with a need to invest. This paper is not speculating on the overall positive or negative implications of an increase of automation on the U.S. economy and job market, but merely establishing a connection that analysts might have overlooked in the early stages of the Act’s implementation.