In the U.S. economy, there are tens of millions of businesses, including more than 30 million pass-through businesses and more than a million C corporations. Most output and employment come from firms that provide services to consumers—such as education, health care, and social assistance services—though a large share of output and employment still comes from firms in production industries, particularly manufacturing.
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Less than one percent of businesses employ almost half of the private sector workforce. Large companies pay 89% of corporate income taxes in the United States.
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More business income is reported on individual tax returns than corporate returns. The U.S. now has fewer corporations and more individually owned businesses. Corporations make up less than 5 percent of businesses but earn 60 percent of revenues.
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A recent paper discusses two main trends related to U.S. entrepreneurs: the decrease in the number of entrepreneurs and the increase in their borrowing. Entrepreneurs have increased their debt holdings relative to their assets over the past three decades.
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South Carolina is by no means a high tax state, though it can feel that way for certain taxpayers. The problems with South Carolina’s tax code come down to poor tax structure. Explore our new comprehensive guide to see how South Carolina can achieve meaningful tax reform.
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Here’s how the new pass-through deduction works and how it can be reformed to be less complex, less prone to abuse, more neutral, and more economically efficient.
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Amending the Illinois constitution and adopting a graduated-rate income tax cannot solve the state’s fundamental problems. Instead, it doubles down on an already uncompetitive tax code.
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The proposal includes some good reforms, including conforming to the federal full expensing provision, but also rolls back some recent positive changes.
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Taxpayers reported $10.4 trillion of total income on their 2015 tax returns. This report breaks down the sources of this income: wages and salaries, business income, investment income, and retirement income.
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Senator Hass’s proposal to limit the special pass-through deduction in Oregon is the right choice, protecting the state’s budget, while advancing sound tax policy.
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Oregon’s Legislative Revenue Office anticipates a $40 million revenue loss in fiscal year 2019, for one simple reason: absent legislative action to the contrary, Oregon will adopt the new pass-through deduction, while most other states will not.
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For every 1 percentage point increase in a state’s corporate tax rate, employment in start-up firms declines 3.7 percent, according to a recent Federal Reserve study.
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For policymakers in most states, the fact that the pass-through deduction doesn’t affect AGI should come as a relief. For those in the six states which use federal taxable income as their starting point for conformity, decoupling from the provision is an entirely viable option.
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A more careful look shows that the Senate Tax Cuts and Jobs Act doesn’t put pass-through businesses at a disadvantage compared to C corporations.
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The House of Representatives passed the Tax Cuts and Jobs Act by a vote of 227-205. Here is a summary of the major provisions in the final package.
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The Chairman’s Mark of the Senate’s Tax Cuts and Jobs Act includes a number of important changes. Here’s a quick overview of those that matter most.
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