Does the Federal Income Tax Favor Small Business?
Publication Date: January 2008
Publisher(s): Tax Policy Center
Author(s): Eric Toder
Special Collection: John D. and Catherine T. MacArthur Foundation
Keywords: Fiscal future; Wealth and Retirement; Savings; Business Taxation
Small business is the source of our entrepreneurial genius, creativity, and productivity. Nonetheless, a substantial portion of our economic activity occurs within large corporations, non-profits and public enterprises. This paper discusses how the federal income tax treats firms of different sizes. It reviews specific provisions favoring small businesses and more general aspects of the federal income tax that may differentially affect firms of different sizes and also discusses how opportunities for tax avoidance and costs of complying with the tax law affect businesses of different size.