Running head: IMPACT OF TAX CUT AND JOB ACT 1

“The Impact of Tax cuts and Job Act on the Practice of

Fundraising in the United States of America”

Submitted By: Uzo Fortune Ufomba

fortuzo@yahoo.com
IMPACT OF TAX CUT AND JOB ACT 2

Table of Contents

Chapter 1: Introduction .............................................................................................................. 3

1.1 Background ...................................................................................................................... 3
1.2 Aim ................................................................................................................................... 4
1.3 Objective .......................................................................................................................... 4
1.4 Research rationale ............................................................................................................ 4
1.5 Research relevance ........................................................................................................... 5
1.6 Research questions ........................................................................................................... 5
Chapter 2: Literature review ...................................................................................................... 5
2.1 Fundraising Practices of Intercollegiate Athletic Departments........................................ 5
2.2 Projected changes in Donations ....................................................................................... 6
2.3 Financial Impact ............................................................................................................... 6
2.4 Effects of Tax Cuts and Jobs Act ..................................................................................... 7
2.5 Business Tax Reforms...................................................................................................... 8
Chapter 3: Research Methodology............................................................................................. 8
3.1 Introduction ...................................................................................................................... 8
3.2 Research philosophy ........................................................................................................ 9
3.3 Research approach.......................................................................................................... 10
3.4 Research strategy............................................................................................................ 10
3.5 Research ethics ............................................................................................................... 11
3.6 Sources of Data .............................................................................................................. 12
3.7 Collection of data and exposure assessment .................................................................. 12
3.8 Data Management .......................................................................................................... 13
3.9 Data Analysis strategies ................................................................................................. 13
3.10 Limitation of the study ................................................................................................. 13
3.11 Time Frame and Budget ............................................................................................... 14
Chapter 4: Discussion ............................................................................................................ 155
References ................................................................................................................................ 16
IMPACT OF TAX CUT AND JOB ACT 3

Chapter 1: Introduction

1.1 Background

In the year 2018, President Trump adopted new income tax reforms. This can be

considered as a major change in the policies that has ever happened in the history of the

United States of America. The changes in the tax policies have a huge impact on various

sectors like business, industry, corporation, and individuals. Various organizations are of the

opinion that this act is solely meant for the purpose of demotivating the charitable work.

However, available data clearly shows that this charitable work has gone up by 0.7 percent. It

indeed has an impact on the donations due to the new policies and regulations that has been

implemented on the tax system. The tax year closes in April, every year. So, in the new

accounting year of 2019, most of the taxpayers had to face an uncertain situation, since they

had to, all of a sudden, pay more taxes than before (Rogal, 2019). Though people had to face

much lesser refund than before, the financial condition has not changed with the alterations in

the tax system. Studies have shown that many people made donations just to evade taxes

because they did not want to pay the taxes. Various statistics have shown that people do

charitable funding just for their own philanthropic interests. Fundraising for nonprofit

purposes are less in number, when compared to the donations for their own profits. With the

amendments in the tax system, the scenario has changed as people cannot escape in the name

of fundraising and will have to pay the taxes. Various tax consultants have also urged their

clients to clear out their withholdings in order to avoid the abundant taxes that can lead to

bigger losses (Busvek, 2019). Trump has made the biggest move which was not made in the

history of the United States, dating back to thirty years. The law has created a single

corporate tax, which is up to 21 percent. The new act will also eliminate the tax benefits that

were promised to be provided to the individuals and their families by 2025.

IMPACT OF TAX CUT AND JOB ACT 4

1.2 Aim

The aim of this study is to reveal the changes witnessed in the practice of fundraising

due to the modifications in the Tax reforms and Job Acts in the United States.

1.3 Objective

The research is being made with the following objectives:

 It is done to determine a general view of the effects of the changes in the Tax Cuts

and Job Acts (TCJA) on the financial conditions of the United States, after Trump

introduced them.

 To determine its effect on the various private sectors.

 To analyze the effects it will have on the academic field and the athletic institution.

 To investigate the significance and novelty of the new modification that is being made

in the TCJA.

 To find out whether every section of the citizenry will benefit from the changes done

in the tax system or not.

1.4 Research rationale

This study is done to get a deep understanding of the effects of the changes made in

the TCJA on the corporate world and individuals in America. (Herrero, & Kraemer, 2020).

The study will bring out the adverse effects that are being faced with the modification in the

act, whether it has positive impacts or it is having a negative impact. The study will also

provide a much clearer understanding of the various reasons for the change in behavior of the

people towards charitable works and fundraising. As the situation before and after are
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different, it will help us to comprehend how many people did proper fundraising and how

many people actually did fundraising to avoid taxes.

1.5 Research relevance

The relevance of the research is to develop an insight into the change in the tax

system and the effect that is has on the practice of fundraising. It will reveal whether the

fundraising activity and giving will remain static, plunge or soar.

1.6 Research questions

1. How will the various industries be impacted due to the change in tax systems?

2. What will be the effect of TCJA on the individuals or common taxpayers?

3. Does the change in TCJA have a drawback on the financial conditions of the US?

4. How will the taxpayers be affected by the Tax Cuts and Jobs Act?

5. What is the impact of the Tax Cuts and Job Acts on fundraising activities in the US?

Chapter 2: Literature review

2.1 Fundraising Practices of Intercollegiate Athletic Departments

According to Lisey (2019), it has been projected that the expenses in the fundraising

activities of the intercollegiate activities will increase due to the tax reforms. To this end, the

practice of fundraising needs to be revised to maximize the revenue. The changes in the tax

cut and job acts which have resulted to obvious alterations of the tax framework have made

managing the revenue a bit cumbersome. Hence, the need for a re-examination of the process.

National Collegiate Athletic Association (NCAA) Division 1 Football makes use of one

technique for the fundraising strategy, which is to make use of the tiered reward system

(Bawa, & Williamson, 2019). Various researches are being performed on the strategies but

there is still no specific and well-defined method that has proved helpful in the examination
IMPACT OF TAX CUT AND JOB ACT 6

of the structure and the pricing strategy. The research is meant to form an empirical study for

the tiered reward system.

2.2 Projected changes in Donations

As per Meer & Priday (2017), it is hoped that present and future research works will

result in the generation of meaningful data that will help in the estimation of the pricing

elasticity from the year spanning 2001 to 2017. It clearly shows that the tax cuts, better

standard of deduction and greater child tax credit will help in generating the benefits. The

data shows that previously, any American having an income of 75,000 dollars, had to pay a

tax of 3,983 dollars. What that means is that they had to pay a 347 dollars income tax, and out

of which they got a refund of 147 dollars when the income tax is paid. However, the

implementation of the tax cut and job acts has favored the Americans a lot, because any

American with earnings of 75,000 dollars now pays 1,739 dollars as tax, which means there

is a savings of 2,244 dollars per family (Barker, 2019). It sums up to nearly 200 dollars a

month. It has being found that families that are more in number will be less affected. This

reform in the American tax system is a welcome development though some still believe that

it is a rather unfair one which is crafted to favour certain groups of people. This might lead to

a significant reduction in charitable giving.

2.3 Financial Impact

As per McWithey (2019), it has been projected that with the change in the tax cut and

job acts, a constant impact would be felt on the finances of the United States, in the near

future. This has an adverse effect on the Division 1 universities that operate the athletic

departments and make fundraising efforts. Even if there is a certain impact in the various

sectors, the condition of America is supposed to be much better than before, as the previous

tax reform had a lot of tax pressure on the people. With this act and a tax cut, businesses and

consumers have an optimized return. The various benefits show that Americans are getting
IMPACT OF TAX CUT AND JOB ACT 7

back to their jobs and capital investments have increased than before. Even the consumers

have more money in their pockets than the previous conditions. This has to lead to greater

creativity and talent, as a result of which, the income of the Americans would increase and

the jobs are also increasing. (Cohen, & Viswanathan, 2019). The decision of Donald Trump

has led to an increase in the financial condition of the market. However, the athletic programs

are facing a genuine set back recently as there is a reduction of the premium by 80/20. So, it

is a concern for Division 1 universities of how things are going to be operated. The study

basically deals with the kind of opportunities and benefits that are going to be gained and the

kind of deduction that is going to be faced.

2.4 Effects of Tax Cuts and Jobs Act

According to Gale, Gelfond, Krupkin, Mazur & Toder (2019), it has been mentioned

in the study about the effects of the Tax Cuts and Jobs Act that were implemented during the

period of 2017, which is considered to be the largest overhaul since 1986. The new law that

has been implemented, has made changes in various tax rates that include both the private

sector as well at the individuals. This has brought in a mixed review from various sections of

people. The picture clearly shows that a certain section of people applaud the decision as the

tax to be given is reduced, while the returns from the income tax are being reduced. So

monthly returns from the tax show that, around 179 dollars have been reduced. Previously

people had to pay a tax rate of 35 percent on the total income whereas the present scenario

shows that people have to pay around 21 percent on the total income (Kopp, Leigh, Mursula,

& Tambunlertchai, 2019). So, there is a reduction of the tax by 14 percent. Various

researches have been made on it which shows that the impact of the new law in the long term

will be minimum but it will impact the GDP negatively in the long term as the revenue

generated will be less. The government now has to be more dependent on capital inflow from
IMPACT OF TAX CUT AND JOB ACT 8

the other nations. In other words, the government has to take loans for the upcoming projects

as there is a reduction in federal revenues.

2.5 Business Tax Reforms

As per McKenzie, & Smart (2019), it has been projected in the study about the fiscal

uncertainty that will be faced due to the reforms in the Tax Cuts and Jobs Act. Previously,

Canada used to have a competitive advantage over the USA on the tax system which has

disappeared now. The implementation of the Tax Cuts and Jobs Act seems to have an effect

on the investment in Canada, though more facts are being sought. With the reform of the Tax

Cuts and Jobs Act, it is evident that Canada based companies will shift their profit from 8

percent to 28 percent homeward which will have a significant amount of impact on Canadian

corporate taxes. This will bring in a positive impact on the investment and productivity in that

country. The tax reform, not only has an impact on the Canadian tax policies, but also has a

major impact on the US as well (Clausing, 2020). This will lead to reduced health insurance

coverages and increased premiums for healthcare. It will have an adverse impact on the

charitable programs, both in the state and local governments. The major impact will be, that

the US government would have to take loans from other countries which needs to be repaid

later due to the implementation of the new tax reforms.

Chapter 3: Research Methodology

3.1 Introduction

The research paper will be done using quantitative and qualitative approaches so that

a better insight can be gained about the effects on the fundraisers orchestrated by

modification that will be made on the Tax Cuts and Job Acts. For the qualitative approach,

various literature review of peer-reviewed journals is being chosen. Qualitative research helps

in answering the various questions on why and how people behave in a certain manner, and it
IMPACT OF TAX CUT AND JOB ACT 9

provides an in-depth knowledge about the behavior of humans. For the quantitative approach,

the data is being collected through various surveys, questionnaires and through various

interviews which helped in collection of various data. This data, when analyzed, helped in

getting a clear picture of the effects of the act on various industries and common people.

Quantitative research is dependent on numerical data which is being applied with various

mathematical formulas to get the desired result or output.

3.2 Research philosophy

In research philosophy, two terms are being highly used; that is, epistemology and

doxology. Basically, epistemology relates to what is true and is known whereas, doxology

deals with what is believed to be true. There are four categories of research philosophies that

are being followed worldwide which consist of pragmatism, positivism, realism, and

interpretivism. Positivism and Interpretivism are the two categories of research philosophy

that are being widely used. This research that is being done, is based on quantitative and

qualitative data, for which pragmatism and realism are being chosen for the research

philosophy. Pragmatism is chosen since it makes use of mixed data collection methods;

hence, it will give the research both qualitative and quantitative approaches. Pragmatism is

being used in order to prove a proposition to be true when the work done is satisfactory,

which means unpractical ideas are being rejected. Realism is chosen since it fits the subject

matter. The Tax Cuts and Job Acts is realistic and it can be analyzed both, in a qualitative and

quantitative manner. So, realism is the best way to make a better insight into the matter. On

the other hand, Positivism can be capitalized with the help of large structured data samples

which can be gathered through both, the quantitative and qualitative way. Interpretivism deals

with the small sample space and it is based on either qualitative or quantitative approaches.

Since this research is focused on both the approaches so it is feasible to make use of

pragmatism and realism.

IMPACT OF TAX CUT AND JOB ACT 10

3.3 Research approach

The approach for the research is a broad sense of collecting data, analyzing, and

generation of output. So, it helps in generating a proper procedure and plan which can be

utilized in the research to gather more valid data and use a proper technique to get a more

accurate result. Three types of approaches are being used in research which will include the

inductive, deductive, and abductive approaches. The research approach is divided in two

parts namely data collection and data analysis. In Data collection, both quantitative and

qualitative approaches are being followed. In data analysis, two of the approaches that are

being highly followed are inductive and deductive approaches. The qualitative and

quantitative approaches are being used, and therefore, both the inductive and deductive data

analysis approaches are needed. If the research was being done on only a qualitative

approach, only then would inductive analysis approach be implemented. If the research was

being done on quantitative approach, then, the deductive data analysis approach would be

implemented. Since the research is being done in a mixed pattern, both deductive and

inductive approaches are being applied. This will help in getting adequate knowledge about

the consequences that may be experienced due to the Tax Cuts and Job Acts. While doing

this research, a consistent behavior is being maintained such that there is a link between the

methods, methodology, and analysis.

3.4 Research strategy

The research strategy that will be applied consists of proper planning which will help

in getting a proper result. It includes a step by step implementation of the plan and

procedures which will help in providing the needed direction and motivation for achieving

the desired results. This will help in conducting the research in a proper manner and will help

in completing the research in set period with quality outputs. For the research, at first, there is

the need to focus on the present and past situation of the Tax Cuts and Job Acts. The research
IMPACT OF TAX CUT AND JOB ACT 11

needed a detailed understanding of the kind of reaction the fundraisers did have before the

implementation of the TCJA and the kind of reaction the people have after the

implementation of the TCJA. So, this will be done in phase 1 of the research. The phase 2 of

the research consists of a detailed research strategy; that is, the collection and analysis of the

data which is the priority of the research to get an authentic result that is representable to the

audience. The main priorities are being sorted out first, which are the things that need to be

done. The impact on the common people and various sectors of industries is being studied.

Fundraising is mostly done by various private organizations in which common people are

also involved. Secondly, it was important to find out how many people actually did the

fundraising for the charitable purpose and how many did fundraise to avoid the payment of

tax. So, this was the primary concern and focus area during the research which helped to

develop a proper insight on the various facts about the TCJA and how it will impact the

people. It also helped in understanding what is being done to improve the financial condition

of the United States. Phase 3 of the research strategy included the research, which is to

actually deploy the data that will be gathered to generate the knowledge from the information

obtained.

3.5 Research ethics

The research will be done completely by keeping in mind the ethical principles. The

research, when done, will keep in mind issues on confidentiality, creditability, respect of the

intellectual property, sentiments, proper management, proper publication, proper respect for

the colleagues, and maintained social responsibility. The research will be done with the intent

that plagiarism will be avoided and no such source will be used that would be copied. Any

source, if used, will warrant a proper permission of the author, and proper credit will be given

for the authors work in the research. The work that is being used in the literature review,

properly mentions the author's name in order to show respect for the hard work that the
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authors put in to develop a research paper. The research will be done by keeping in mind that

the contents will be developed uniquely without stealing someone else’s work and even if

someone else’s works has been used in certain parts, then it is being referenced properly to

provide creditability to that person. Maintaining ethics is the primary concern in the research,

which will be done and hence proper measures have been followed such that emotions of

other people are not hurt. Even the co-workers involved in the research are being given

proper credit. The deceptive ways of publishing the research paper are being avoided to

maintain the integrity and authenticity of the work.

3.6 Sources of Data

In the research, 300 respondents will be interviewed and various survey results will be

checked through various sources. The respondents will be chosen from various organizations

that are holding major managerial posts and also the taxpayers are being interviewed. Out of

the 300 respondents, 100 respondents will be managers of big organizations, and the rest of

200 respondents will consist of the common taxpayers. The main functionality of the data

analysis is to generate meaningful information that will help in formulating a proper

conclusion about the TCJA.

3.7 Collection of data and exposure assessment

In processing data of the research, the respondents will be contacted through emails.

The selected participants will interact through emails and various questions will be asked

through the same. This will help in maintaining social distancing during this COVID-19

period. It is common knowledge that due to the COVID-19 pandemic, most of the countries

around the world are facing a lockdown to stop the spread of the virus. So, for the research

purpose, it was feasible to contact the participants through emails. Even the participants

agreed to give the interviewed through email and the rest of the data will be generated from

the online sources, which are the surveys conducted by the governments. During the
IMPACT OF TAX CUT AND JOB ACT 13

interview and questionnaire, each of the participants will be isolated from one another. In

other words, no one will be in contact with the other participants. It will be a private

conversation.

3.8 Data Management

The interviews and surveys that will be conducted need to be stored for the purpose of

analysis. Hence, various storage mediums will be used such that the data can be stored in

proper tabular format. After receiving this data, it will be saved properly for future references

and studies.

3.9 Data Analysis strategies

After storing the data, it will be analyzed with proper statistical tools and applications.

Various tools are present that will help in the analysis of the data. The governmental sites will

help in the research to get a proper source of data even if most of the data did not fit in the

research purpose, still the remaining data will be cleansed to serve the purpose of analyzing.

The data that will be received from various interviews and surveys will be processed to

generate meaningful information that will serve the research purpose. The classification of

the information generated will be classified accordingly in the positive and negative impacts

to generate the desired outcome which will soothe the audiences to understand the

importance of the research.

3.10 Limitation of the study

The research that will be done will have to go through various obligations. First of all,

the participants that are being chosen for the interview and survey will not be physically

available, which is a challenge in conducting the research. The inability to connect with the

respondents physically in the course of this research, poses a threat to the seamless collection

of needed data. With the attendant effects of the pandemic all over the world, it is difficult to
IMPACT OF TAX CUT AND JOB ACT 14

physically go and make the survey. Secondly, in a bid to conduct the survey and generate the

data, it is expedient that email correspondences be established with the respondents. This

implies that all the correct emails of the respondent must be collected and properly utilized, to

generate meaningful conversations. This is a hectic and time-consuming process. Thirdly,

making video conferencing or voice calls is not reliable all the time due to the network issues

that can arise. Even making so many phone calls or video calls does not help to generate the

desired output.

3.11 Time Frame and Budget

The amount of time and cost needed for the research is mentioned in the chart. For the

identification of the problem, the time needed will be around 31 days and no cost is needed.

For further study on the problem, it needs 61 days and $250. This is because of the internet

charges and also, various accesses to journals require a certain cost. In the planning of the

research, it needs 31 days and $10. This is because stationery items like pens and paper

needed for the interview sessions will be purchased. For a collection of the data, it needs

61days and $100 cost. The person that will be interviewed and questioned will take certain

charges for giving their time for the interview and internet cost is also associated with it.

TASKS DURATION COST Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Identification of the
31 days Nil
problem
Further study on the
61 days 200 USD
problem
Planning up the
31 days 10 USD
research
Collection of the
61 days 100 USD
data for the research
Analysis of the data
61 days 250 USD
collected
Final finding from
28 days NIL
the research
For the analysis of the data, a total of 61 days is needed and $250 will be the cost. For

analysis, software tools and analytical tools are needed to be purchased. Finally, the report

preparation of the findings will require 28 days. All the collection of data and presenting of

the result will take 8 months.

IMPACT OF TAX CUT AND JOB ACT 15

Chapter 4: Discussion

The data generated for the analysis needs to be analyzed first, and then, modeled with

a suitable predicting model which will help in generating the required information. It is

important to mention the importance of online surveys in the collection of data. So, it is

evident that the source's data might consist of various errors that need to sorted, because in

survey, various responses are presented which do not suit the research and need to be

removed. The analysis of the data will give a clear picture of the positive and negative

impacts due to the implementation of the TCJA. The positive impact will clearly show that

after the reform in the Tax Cuts and Job Acts, it will reduce the overall taxes for most of the

people.

Along with positive impact comes the negative impact as well. The main

disadvantage that comes with the tax cuts is that it will negatively impact the economy.

Lower income tax means that it will lead more people to work for more hours. People will

tend to work for more hours which will lead to more income for the people. On the other

hand, the tax received by the government will reduce as less income tax is paid. Similarly, it

will lead to the migration of more people into the United States in search of higher income,

resulting in few jobs for the US citizens. This may also result to a panic situation and civil

unrest among the workers in the country.

IMPACT OF TAX CUT AND JOB ACT 16

References

Barker, W. B. (2019). The Tax Cuts and Jobs Act of 2017: The SALT Deduction, Tax

Competition, and Double Taxation. San Diego L. Rev., 56, 73.

Bawa, S. G., & Williamson, J. M. (2019). Distributional Impacts of the Tax Cuts and Jobs

Act Using Farm Household Microdata. Applied Economic Perspectives and Policy.

Busvek, A. (2019). A Critique of the Tax Cuts and Jobs Act: Modifying the Charitable

Deduction to Restore Taxpayer Pluralism. Stetson L. Rev., 49, 175.

Clausing, K. A. (2020). Profit Shifting Before and After the Tax Cuts and Jobs Act. Available

at SSRN 3274827.

Cohen, N., & Viswanathan, M. (2019). Corporate Behavior and the Tax Cuts and Jobs

Act. Available at SSRN 3449860.

Gale, W. G., Gelfond, H., Krupkin, A., Mazur, M. J., & Toder, E. J. (2019). Effects of the

Tax Cuts and Jobs Act: A preliminary analysis. National Tax Journal, 71(4), 589-612.

Herrero, M., & Kraemer, S. (2020). Fundraising as organisational knowing in practice:

Evidence from the arts and higher education in the UK. International Journal of

Nonprofit and Voluntary Sector Marketing, e1673.

Kopp, E., Leigh, M. D., Mursula, S., & Tambunlertchai, S. (2019). US investment since the

tax cuts and jobs act of 2017. International Monetary Fund.

Lipsey, J. U. (2019). Assessing Fundraising Practices of Intercollegiate Athletic Departments:

An Empirical Analysis of Tiered Reward Systems.

McKenzie, K. J., & Smart, M. (2019). Tax Policy Next to the Elephant: Business Tax Reform

in the Wake of the US Tax Cuts and Jobs Act. CD Howe Institute Commentary, 537.
IMPACT OF TAX CUT AND JOB ACT 17

McWithey, J. N. (2020). The 2017 Tax Cuts and Jobs Act: Analyzing its Financial Impact on

Division I Universities.

Meer, J., &Priday, B. A. (2020). Tax Prices and Charitable Giving: Projected Changes in

Donations under the 2017 Tax Cuts and Jobs Act. Tax Policy and the Economy, 34(1),

113-138.

Rogal, L. (2019). Executive Compensation in the Charitable Sector: Beyond the Tax Cuts and

Jobs Act. Seton Hall L. Rev., 50, 449.