Accounting News

Monday, May 16, 2011
Tax Reform on Flow-Through Business

Ernst & Young have released a study on the effect of tax reform on flow-though business. A Flow-through business is a legal structure where the taxes are paid by owners in the form of income. This eliminates the double tax from taxing the profits and then also taxing the owners income. Some forms of flow-through businesses are LLCs, S-corp and sole-proprietorships, and partnerships. These types of business represent 95% of all business and 54% of private sector employment.

The goal may be to streamline the tax code for c-corps by reducing tax rates and deductions it would be disastrous for flow-through businesses. It would increase tax rates for owners by 8% or $27 billion.

Labels: ,