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Fewer Businesses Are Organized As Taxable Corporations

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Publication Date: August 2007

Publisher(s): Tax Policy Center

Author(s): Eric Toder; Julianna Koch

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Banking and finance (Taxation and tax policy)

Keywords: Tax Policy; Tax Distribution and Economic Trends; Taxation of Households; Distribution of Taxes and Income

Type: Report


Corporations that are taxed under subchapter C of the Internal Revenue Code pay a separate entity-level tax on their income (the corporate income tax) and their owners pay additional tax on corporate dividends and capital gains on sales of corporate shares. Other businesses are taxed as flow-through entities; they file tax returns and report their income but do not pay an entity-level tax. This article discusses the decline in both the share of businesses organized as C corporations and their share of business receipts between 1994 and 2004.