A compilation of the tax-related stories that caught our eye:
Business Tax Reform
The White House is planning on meeting with Republican lawmakers in the days leading up to the State of the Union to push their tax reform plan, pledging to “make sure that we put forward some pretty specific proposals…” Tax reform came up during the President’s year-end press conference as well, part of his ongoing message that he “wants a serious attempt at tax reform next year.”
Combine those comments with noise from the Hill and downtown and there seems to be a critical mass of interest building in pursuit of what some are calling “comprehensive business” tax reform next year – reform that addresses pass-through and corporate tax issues and leaves individual tax challenges for another day.
Left unaddressed in all this talk, however, is what happens to tax rates paid by pass-through businesses. Does “business tax” reform restore rate parity, or are Main Street businesses to be treated like second-class employers? There are many outstanding tax issues important to the pass-through community, but the predicate for getting the tax reform conversation started is simple – it all comes down to the rates.
The folks at the Tax Foundation are out with a great report called Business in America, which serves as a “visual guide to business, taxes, and the economy.”
There’s no shortage of fantastic charts, but the one that caught our eye is on page 28, entitled “Pass-through Businesses Employ Most of the Private Sector Workforce,” which breaks down the share of private sector employment for pass-through businesses by state. The map, and following description, conveys an important point that the S Corporation Association has been trying to make clear for years:
“Not only do pass-through businesses account for more than 50 percent of net business income in the United States, the also account for more than 50 percent of private sector employment.”
The report should be required reading for anybody considering business tax reform next year.
Nothing really new — just some entertaining links:
- Kids explain inversions: http://www.marketwatch.com/video/kids-explain-tax-inversions/D56DE5A8-7943-410A-9B8F-F197C614F192.html?mod=mw_share_twitter
- The man who invented the inversion and the operetta behind the maneuver: http://www.businessweek.com/articles/2014-12-18/first-corporate-inversion-invented-by-liberal-tax-lawyer