Americans often look at businesses impersonally. We think of them as lifeless entities that earn profits and don’t do much else. When we think of businesses this way, it becomes very easy to think that business taxes are somehow different than other taxes.
But the reality is that businesses are simply groups of people; they are workers, consumers, and shareholders.
This means that when we tax businesses, we actually tax people; workers through lower wages, consumers through higher prices, and shareholders through lower returns. Furthermore, the majority of businesses are, in fact, a person that the tax code treats as a business.
In the United States, we place a heavy tax burden on businesses. Our corporations face the highest tax rate and the most burdensome international tax rules in the developed world. Our non-corporate businesses face high tax rates, too, reaching above 50 percent in some states. Furthermore, our tax code actively discourages investment by double taxing that investment at high rates.
America’s high-tax environment stifles the economy and makes work and investment more expensive. This is bad for long-term prosperity.
The good news is that there is a solution. Tax reform that lowers taxes on businesses and investment can create jobs, increase incomes, and lead to higher living standards.
This book is your visual guide to business taxes in America. It discusses the vast array of business types and sizes, the sectors of the economy they serve, and the effects of taxes on U.S. businesses and the people who build, create, and maintain them.
The Tax Foundation is the nation’s leading independent tax policy research organization. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels.
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