The problem is that those corporations which pay the standard corporate income tax directly--called "C Corporations--aren't reponsible for generating the most U.S. business income. According to a Tax Foundation report, sole proprietors, limited liability companies (LLCs), partnerships, and S-corporations comprise 50+% of all business income.
Are "pass-through" businesses--whose income "passes through" to the owners of the business, who pay individual income tax on the company's earnings--which are very important to the nation's economy the stormy petrel's real enemy?
As of 2012:
- 54.8% of business employment (that's 66.6M workers) was in pass-through businesses.
- 45.2% of the private sector work force (that's 54.9M workers) is employed by C-Corporations.
- The number of pass-through businesses varies state by state.In Montana, 66.9% of business employment is in pass-through businesses, while 47.4% of Hawaiian employment is in pass-through businesses.
Pass-through businesses pay the individual income tax, not the corporate income tax. Raising the individual imcome tax rate doesn't just affect the individuals who must pay their taxes, but also all of those pass-through businesses which pay the individual income tax rate.
As it ends up, when those liberal stormy petrels decry those "evil" corporations, they're really decrying all of those "Moms and Pops" who operate pass-through businesses, treat the revenues generated as personal income, and pay the personal tax rate on their income.
Let the discussion begin...
To read the Tax Foundation report, click on the following link:
"Most of the Private Sector Workforce is Employed by Pass-through Businesses."