Quote:
Originally Posted by afc wimbledon
Second Point. It is perfectly possible to write out a tax law that targets individual income rather than business income, the only hardship this would cause small business would be forcing their accountants to file seperatly.
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I'll just comment on the misunderstanding again people seem to have of the US tax system. A significant number of small businesses operate what are called S-Corporations in the US. These corporations are not taxed but all the income flows through to the owners and thus are taxed on their individual returns. However, S-Corporations still are required to file a seperate tax return even though they do not pay income tax. For example:
Mr. X opens up a business and decides to incorporate using the S-Corp
Business earns $300,000 taxable income during the year
The S-Corp pays $0 in income tax
Mr. X leaves $200,000 in the business and takes $100,000
Mr. X is taxed on $300,000 of income on his personal return even though he only has $100,000 available for his personal use
Can the tax code be changed of course but a change to the S-corp form of business would have a significant impact on small businesses owners. I say that because in order to operate an S-Corp there are a lot of restrictions on who can be shareholders how many shares can be issued.