November 21, 2013
Joseph Perry, Partner-in-Charge, Tax & Business Services, Quoted in Bloomberg Article "Equalizing Rates Among Disputed Details in Code Revision: Taxes"
By Don Frederick
Beneath the bipartisan push by key lawmakers to revise and simplify the U.S. tax code lies a simmering debate over whether to equalize top corporate and individual rates.
Tax policy analysts say that setting the same top rates for both categories would give corporations less reason to structure their businesses based solely on avoiding higher levies, Bloomberg BNA reported. That may lead to greater job creation, the analysts say.
The House and Senate lawmakers leading a drive for the biggest tax-code revision since 1986 have so far staked out different positions. Representative Dave Camp has called for cutting the top corporate and individual tax rates to 25 percent each, while Senator Max Baucus favors lower corporate rates and hasn't yet committed to equal rates on the individual side.
Some businesses will let tax rates influence their decisions about corporate structure, Joseph Perry, partner in charge of tax and business services at Marcum LLP in New York City, said in an interview. Still, he said, a prudent tax adviser wouldn't suggest giving tax rates so much weight. Small businesses that need steady cash, for instance, are typically better off filing as S corporations or partnerships, Perry said.
"Taxes should never drive business considerations," Perry said. "You need to focus on business decisions, one of which is taxes."
If the number of tax filings under C corporation status were to gain ground on S corporation filings, that would reverse a trend. From 1986 to 2007, the number of S corporations filings grew steadily, eclipsing all other corporate filings in 1996 and reaching 4 million in 2007, the Internal Revenue Service said.