Honors College Theses

Publication Date



Accounting (BBA)

Document Type and Release Option

Thesis (open access)

Faculty Mentor

Dr. Lowell Mooney


The Corona Virus has interrupted several years of strong economic expansion in the United States. In fact, it has disrupted the lives of every single person and organization in the world. After reaching its peak in mid-April, the rate of cases and related deaths has finally started to slow down. The U.S. Government passed three different pieces of legislation to address the effects of the virus. It is now considering legislation (referred to as Phase IV) to accelerate the return of the U.S. economy to its pre-pandemic level. Studies have shown that capital expenditures have been essential during periods of economic recovery. This study evaluates whether a reduction in corporate tax rates leads to an increase in capital expenditures by examining capital spending in two different time periods, one prior to the 2017 tax cut and one immediately following. The Tax Cuts and Jobs Act of 2017 significantly reduced corporate tax rates, from 35 to 21 percent, effective January 1, 2018 (Auerbach, 2018, Vol. 32, No. 4, Fall ). The results of this study will help the U.S. Congress determine whether a tax cut should be included in its upcoming Phase IV stimulus package which in turn could help restore the U.S. economy from the effects of the COVID-19 pandemic.

Thesis Summary

This study assessed the extent of the relationship between taxes and capital expenditures by performing a multiple regression analysis. Corporate tax rates were found to be a significant determinant of capital expenditures, supported by the implementation of the Tax Cuts and Jobs Act of 2017.