Taxation-Federal Commons^™

Three Cheers For Passthrough Taxation, Bradley T. Borden

Bradley T. Borden

This report addresses recent suggestions by the Obama administration, lawmakers, and others that some passthrough entities should be taxed as corporations. It argues that passthrough taxation is the correct regime, from a technical standpoint, for many business arrangements. Applying an entity tax to those structures would be inappropriate. The report argues that an entity tax would violate notions of equity by treating members of passthrough entities differently from individuals. Next it demonstrates that a tax on passthrough entities would shift a greater share of the tax burden to middle-income individuals. Finally, the report encourages the administration and lawmakers to increase …