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The New Tax Shelter for Wealthy Americans
Report

The New Tax Shelter for Wealthy Americans

C-Corporations

Adam Looney
Brookings Institution, 2017
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Editorial Rating

8

Qualities

  • Analytical
  • Eye Opening
  • Overview

Recommendation

With the US Congress enacting sweeping tax legislation in late 2017, tax strategies will change dramatically, particularly for those businesses that currently pay taxes at pass-through individual tax rates. Researcher Adam Looney, in an article written just before the final landmark legislation passed, explains how the reduction in the corporate tax rate might propel businesses to reorganize to avoid higher individual rates. getAbstract recommends this thought-provoking and expert report to executives and business owners looking to better understand the ramifications of tax reform.

Take-Aways

  • Under 2017 legislation, the top US corporate tax rate falls from 35% to 21%, allowing businesses to markedly increase their profitability.
  • As recently as 2014, 95% of the 26 million businesses in the United States avoided filing corporate tax returns and instead opted for pass-through status.
  • Under the pass-through model, a business paid taxes at the tax rate for individuals, which yielded a far lower tax bill.

About the Author

Adam Looney is a senior fellow in economic studies at the Brookings Institution.

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