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Taxing Businesses Through the Individual Income Taxreport
Since the individual income tax was instituted in 1913, the profits of most businesses have been allocated, or “passed through,” to their owners and subjected to that tax—rather than to the corporate income tax. However, most business activity (specifically, the total revenue that businesses receive as receipts from sales of goods and services) has occurred at firms subject to the corporate income tax (C corporations) because those firms tend to be larger than pass-through entities.      CBO Releases Report on Taxing Businesses Through the Individual Income Taxblog post
Over the past 30 years, the activity of businesses that are subject to the individual income tax has grown compared with that of businesses subject to the corporate income tax. That shift has reduced federal revenues but probably promoted overall investment and a more efficient allocation of resources. |
