Issues in a Tax Reform Limited to Corporations and Businesses

Source: Jane G. Gravelle, Congressional Research Service, CRS Report, R44220, October 8, 2015

Some tax proposals have focused on broadening the tax base and lowering the rates of both individual and corporate income taxes. In some cases, these proposals have advanced a revenue-neutral tax reform. In other instances, they have proposed revenue increases. …. Given the challenges of adopting a broad income tax reform, some proposals have focused on business-only tax reform. …. This report discusses issues and options that might be considered in a business-only tax reform, including the approach of the Administration’s reform as well as other potential options to consider. It first outlines how firms operate as incorporated or unincorporated businesses for tax purposes and discusses the share of assets
and income in the unincorporated sector. The next section examines corporate tax expenditures and the extent to which those tax expenditures affect pass-through firms. The final section discusses a number of options and issues that might be considered for business-only tax reform. ….