The decisions of the self-employed are of empirical interest because these individuals report their income under the personal income tax system. The U.S. Bureau of Economic Analysis estimates that the personal income tax system is the biggest source of revenue for the government. In this paper I use data from the Panel Study of Income Dynamics (PSID) to analyze the effect that The Tax Reform Act of 1986 had on the decision to become or remain self-employed. To accomplish this I will use a simple difference method that compares the movement between employment groups in the aftermath of The Tax Reform Act of 1986 (treatment period) to the movement between employment groups before this tax legislation was enacted (control period). I find that The Tax Reform Act of 1986 (TRA86) had an adverse effect on self-employment and actually caused more unemployment.