The U.S. loses about 60,000 corporations per year and has lost about 1 million corporations since the Tax Reform Act of 1986.
Over time, more businesses have structured themselves as "pass-through" entities. This allows profits to be passed through to owners and taxed at individual tax rates that are often lower than the corporate tax rate and eliminates double taxation for shareholders.
More than 60 percent of U.S. business profits are now taxed under the individual income tax code rather than the corporate tax code, which explains why the U.S. collects a relatively small amount of tax revenue from corporations despite having the developed world’s highest corporate tax rate.
Outside of taxation, the traditional corporate form often provides the most efficient business structure for large-scale projects and investments. Excessive corporate taxation and the subsequent decline of the corporate sector artificially limits this important aspect of the economy.
The U.S. should do what the rest of the developed world has done: reduce the corporate tax rate, integrate the corporate and shareholder taxes to avoid double taxation, and limit corporate taxation to profits earned domestically.
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