ALBUQUERQUE, N.M. — For those of you who like, or at least tolerate, politics, the presidential campaign has kicked off. Anyone registered as a Democrat, and meeting the minimum age of 35, has entered the field. And all 30 million of them have signed on to raise corporate tax rates.
The 2017 tax act reduced the top corporate tax rate by 40%, from a maximum of 35% to a maximum of 21%. Corporate tax revenues are down, as would be expected. This appears to be the golden age of corporations.
But there’s a little problem — corporations still have the potential for two levels of tax. In contrast, “pass through” entities, such as partnerships and S corporations, can be structured to have only one level of tax.
Economists teach us that we prefer more to less. Unless the item under consideration is taxes or, for some, cauliflower or prunes. So most people prefer pass through entities to regular corporations. There is proof of this, as corporate tax filings are down almost 25% in the last 10 years.