In this article, the author focuses on one well-known QSBS problem, colloquially known as “stacking,” and potential responses to stacking short of a legislative fix.
Income and wealth dominate inequality debates, but consumption inequality may sit closer to household welfare. New research on state corporate-tax changes finds the burden falls unevenly, with larger effects on non-white, lower-educated, and liquidity-constrained households.
New accounting rules require publicly traded companies to provide more detailed tax disclosures, including rate reconciliations that explain why effective tax rates differ from the U.S. statutory rate of 21%. However, this reconciliation format was designed for the U.S. worldwide tax system and hasn’t been updated for the post-2017 territorial system, where foreign earnings are largely exempt from U.S. tax. This analysis examines how the outdated benchmark creates interpretive challenges and may lead to misunderstandings about what tax disclosures actually reveal.
Partnerships have become the dominant business structure in the U.S., outnumbering C corporations by more than 2-to-1 and representing over $50 trillion in assets. As flow-through entities with significant flexibility in allocating gains and losses among partners, partnerships play a central role in real estate, private equity, and professional services—yet they also contribute substantially to the tax gap and face historically low audit rates. This analysis examines partnership taxation, structural complexity, and enforcement challenges.
S corporations account for the majority of U.S. corporate entities, with 5.2 million filing returns compared to 1.6 million C corporations. Unlike C corporations, S corporations are flow-through entities where income passes to shareholders’ individual tax returns, avoiding double taxation. This analysis examines how S corporations are taxed, the eligibility restrictions they face, compensation rules for shareholder-managers, and the tax and non-tax tradeoffs that affect competitiveness and organizational choice.
Businesses face far more than just income taxes. From sales tax on supplies to payroll taxes on wages, property taxes on facilities, and dividend taxes on distributions, taxes touch nearly every stage of business operations. This analysis examines why governments tax businesses, walks through the full spectrum of business tax obligations using a simplified example, and compares the U.S. tax structure to other developed economies.
Corporate income taxes account for just 8.3% of federal revenue, but this figure tells an incomplete story. Most U.S. businesses operate as flow-through entities—sole proprietorships, partnerships, and S corporations—where income is taxed on individual returns rather than at the entity level. This analysis examines how business income is defined, measured, and taxed across different entity structures, and why understanding these distinctions is essential for evaluating tax policy debates.
Are dividend recipients lightly taxed? A common claim suggests wealthy investors pay lower tax rates than wage earners. But this comparison typically overlooks a key feature of the tax system: corporate profits are taxed twice—first at the corporate level, then again when distributed as dividends. This analysis examines the combined tax burden and compares it across countries.
The IRS audits only a small fraction of tax returns, yet enforcement plays a critical role in revenue collection. With an annual tax gap exceeding $600 billion, research shows that enforcement affects not just direct collections, but also voluntary compliance through deterrence. This analysis examines how enforcement capacity shapes taxpayer behavior and government revenue.