Zero Tax Is Normal For Many Corporations


WASHINGTON, Jan. 10 (UPI) — Nearly 70 percent of U.S. corporations were organized as non-taxable businesses as of 2008, IRS records show.

The percentage jumped significantly since 1986 when 24 percent of corporations used the “pass-through” tax structure, The Wall Street Journal reported Tuesday.

By 2008, 69 percent of businesses were set up to pass profits to shareholders to the point that it reduced their tax burden to zero. The law assumes that individuals will pay tax on the profits, rather than the corporations themselves.

But the growing popularity of a pass-through tax set up is why even some Republican legislators are calling for a tax system overhaul, the newspaper said.

It is also why tax revenues from corporations dropped to 1.3 percent of the gross domestic product, down from 2.7 percent in 2006 and from 6.1 percent in 1952, the Journal said.

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