Corporate Tax Reform: Taxing Profits in the 21st Century

Pass-Through EntitiesDo-It-Yourself Tax Reform

In the last chapter, we learned how America’s largest corporations are helping themselves to tax cuts by shifting profits offshore. In this chapter, we’ll see how the corporate tax is being shrunk at the other end. More and more of America’s small and midsize businesses have organized their affairs so they are entirely and forever free of the corporate tax.

Businesses subject to the corporate tax are C corporations. There are three no-corporate-tax alternatives: S corporations, partnerships, and sole proprietorships. Collectively, these three tax classifications are referred to as “flow-through” ...