Christine Walizer, Author at The S Corporation Association

House Bill & S Corps

The House tax reform bill to be considered this week has a headline top rate of 25 percent for S corporations and other pass-through businesses, but in many cases the real rate is significantly higher. S corporation owners need to pay attention.

Here are some of key details:

Professional Services: First, the 25 percent rate doesn’t apply to professional service businesses. Specifically, the bill excludes businesses engaged in “the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, any trade or business where the principal asset of such …

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admin2021-08-16T14:02:16+00:00November 6, 2017|

S-CORP Response to H.R. 1

WASHINGTON, D.C. – S-CORP has been a vocal supporter of the House Republican Blueprint and the unified tax reform framework. We have serious concerns though about the pass-through provisions in the tax reform draft released today. They fall well short of parity with the new 20-percent corporate rate, and, absent amendment, would result in tax hikes for a broad range of pass-through businesses. We look forward to working with the Committee and House leadership to address these concerns and move forward on tax reform.

We support the new 25-percent pass-through rate, but the guardrails that accompany the rate would severely limit …

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admin2021-08-16T14:02:19+00:00November 2, 2017|

Can Main Street Businesses Just Convert? No!

Nor Should They. Here’s Why.

If tax reform results in a top C corporation rate that is far below the top rate offered to pass through businesses, couldn’t pass-through businesses just switch to C status to access the lower rates? Put another way, would forcing closely-held pass-through businesses into the C Corporation double tax system improve the tax code and help the economy? The answer to both questions is an emphatic no. Here are the main points:

It’s the opposite of tax reform. Forcing businesses into the double corporate tax is effectively “anti-tax reform” in that it would return us …

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admin2019-01-31T22:48:47+00:00October 26, 2017|

Pass Through Fallacy and Responses

Marty Sullivan has an interesting post in Forbes this week on the pass through rate challenge, arguing that S corporation shareholders who don’t want to see their taxes go up are being greedy. He says:

You see, for international competitiveness reasons, tax reform must lower corporate rates, and the traditional way to pay for a corporate rate cut is to rid the code of business tax breaks. But if business tax credits and deductions are repealed, they’ll be stripped from passthroughs as well. Passthrough taxes will be raised to pay for tax relief for multinationals. God forbid, Congress …

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admin2019-01-31T22:48:47+00:00October 18, 2017|

Defense of the “Framework’s” Pass Through Tax Rate

The class warfare debate over the tax reform “Framework” has shifted its focus to the pass through business provisions. John Harwood has a typically one-sided piece on the CNBC website, which includes this paragraph:

“There is no strong policy justification for the special pass-through rate in the GOP’s plan,” said Kyle Pomerleau, an analyst at the conservative Tax Foundation. Since pass-through earnings represent around one-third of all income for the top one percent of taxpayers, Pomerleau added, the provision tilts the plan’s benefits toward the wealthy while favoring one kind of business over others.

Kyle is wrong of course. …

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admin2021-08-16T14:02:24+00:00October 10, 2017|