Real Corporate Tax Reform: Treat Corporate Earnings as Personal Income

The administration and the Congress are considering reform of the federal government's corporate income tax by reducing the top rate of the corporate income tax from 35% to as low as 15%.  Cutting the corporate tax rate is not reform.  Real corporate tax reform would treat corporations the same as partnership earnings are currently treated – namely, to tax the earnings of corporations as the personal income of shareholders just as partnership earnings are taxed as the personal income of their partners. Corporations are simply limited liability partnerships.  The distinction of limited liability no longer exists, since most states enable partnerships to register as limited liability enterprises.  So real major reform would be to eliminate the corporate income tax and to tax corporate earnings as the personal income of the shareholders. There is precedent for taxing corporate earnings as personal income.  The earnings of partnerships,...(Read Full Article)

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