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The corporate income tax rate is a progressive system just like the personal income tax. At the lowest bracket (<$50,000), you pay 15%. At the highest bracket

The corporate income tax rate is a progressive system just like the personal income tax. At the lowest bracket (<$50,000), you pay 15%. At the highest bracket ($18 million+), you pay 35%. Small businesses with NO employees (e.g. the 80% of such), are typically pass-through entities not subject to corporate income tax rates, or are making far far less than 18 million dollars. One could easily see a proposal to raise the tax on the highest bracket, or create an even higher bracket (e.g. companies earning 100 million or above), and tax that at 40%.

exclusiv 9y ago
Yes - pass through entities like LLCs pay whatever the owners personal rates are. This is usually higher than 15%. Small and mid-sized businesses often pay more than larger companies despite the progressive rates because they don't have access to legal workarounds or don't have strategic offsets. S-corps are generally the highest and they're prevalent in tech startups of course. "[The] study provides valuable data that confirms small businesses currently pay a higher effective tax rate than many large corporations." [1] The author's suggestion that you don't need profits to reinvest is incredibly naive. My company doesn't hire when profits are low. It's too risky for most companies to do that. So we have some work to do there and we should invest in our small businesses because they 1) produce the bulk of new jobs and 2) produce jobs and environments that are more rewarding. [1] http://www.accountingweb.com/tax/individuals/s-corporations-pay-highest-effective-tax-rates http://www.accountingweb.com/tax/individuals/s-corporations-...
- uiri 9y ago
  LLCs get to choose their tax treatment. They can be taxed as a pass-through entity (e.g. like an S corporation) or they can be taxed like a C corporation. Pass-through taxation is often cheaper because LLCs are often used to wrap limited liability around a partnership, sole proprietorship or to create a simple wholly owned subsidiary separate from its parent.

exclusiv 9y ago

Yes - pass through entities like LLCs pay whatever the owners personal rates are. This is usually higher than 15%. Small and mid-sized businesses often pay more than larger companies despite the progressive rates because they don't have access to legal workarounds or don't have strategic offsets. S-corps are generally the highest and they're prevalent in tech startups of course. "[The] study provides valuable data that confirms small businesses currently pay a higher effective tax rate than many large corporations." [1] The author's suggestion that you don't need profits to reinvest is incredibly naive. My company doesn't hire when profits are low. It's too risky for most companies to do that. So we have some work to do there and we should invest in our small businesses because they 1) produce the bulk of new jobs and 2) produce jobs and environments that are more rewarding. [1] http://www.accountingweb.com/tax/individuals/s-corporations-pay-highest-effective-tax-rates http://www.accountingweb.com/tax/individuals/s-corporations-...

uiri 9y ago
LLCs get to choose their tax treatment. They can be taxed as a pass-through entity (e.g. like an S corporation) or they can be taxed like a C corporation. Pass-through taxation is often cheaper because LLCs are often used to wrap limited liability around a partnership, sole proprietorship or to create a simple wholly owned subsidiary separate from its parent.