Since its release yesterday, the effective tax rate study put out by S-Corp and the National Federation for Independent Business has been getting traction both on the Hill and in the media. The study shows that S Corporations pay the highest effective rates of any business type, and its results come at a critical time for tax reform.
Following the release, the Ways and Means Committee issued a statement:
The study adds to the growing momentum for tax reform expressed by Democrats and Republicans alike who have called for fixing the broken tax code for job creators of all sizes. Those calls are a stark contrast to the Administration’s most recent appeal to lower the corporate rate, while leaving the vast majority of the nation’s job creators – small businesses — struggling with high rates and a more complex tax code.
The study also grabbed the attention of a number of news outlets. Writing for The Hill, Bernie Becker shared his analysis:
[The study] serves as pushback against President Obama, who renewed his call to reform only the corporate tax code last week. GOP lawmakers, the NFIB and the S Corporation Association say that idea will leave behind the millions of businesses that organize as pass-throughs and pay taxes through the individual code.
Michael Cohn of Accounting Today said:
The results of this study come at a critical time for tax reform. House Ways and Means Committee chairman Dave Camp, R-Mich., and Senate Finance Committee chairman Max Baucus, D-Mont., are focusing on crafting a comprehensive tax reform plan that they hope to unveil this year. With the release of the study, the lobbying groups hope to provide lawmakers in Congress with their perspective on how much they believe is paid in taxes by various types of business entities.
They also positioned the study in reaction to a speech last week by President Obama highlighting his proposals for business tax reform, which mainly focused on eliminating corporate tax loopholes and increasing investment in jobs to rebuild infrastructure and encourage more manufacturing.
And writing for Politico, Kelsey Snell had this to say:
A new study from the NFIB found that S corporations will face a 31.6 percent effective tax rate this year and partnerships will see a 29.4 percent rate while the big dogs filing under the corporate code will pay an effective rate of just 17.8 percent. The study is the latest attempt to rebut President Obama’s proposal to do corporate-only tax reform to help finance a new jobs package.