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You mean when you raise taxes, people just don't lie down and take it?

August 13, 2009

Leave it to the Congressional Research Service to discover the obvious:

Currently, both the top individual and the top corporate tax rates are 35%. However, President Obama's FY2010 budget proposes allowing the top individual tax rate to revert to its pre-2001 level of 39.5%. In addition, indications are that legislation similar to H.R. 3970, which was introduced in the 110th Congress by Chairman of the House Ways and Means Committee Charles Rangel and would have lowered the top corporate tax rate from 35% to 30.5%, may be introduced in the 111th Congress. In response to either one of these proposals, economic theory and data would suggest that some pass-through businesses could choose to reorganize as C corporations to take advantage of the more favorable corporate tax schedule.

Imagine that.

I'd link to the report, which provides a very useful summary of the different ways you can organize your business, but the Congressional Research Service has perhaps the most useless web site in the world, with no links to CRS reports. The report is not yet on a private site set up to remedy this deficiency, OpenCRS.com. If you subscribe to Tax Analysts (and you'll be happy if you do), you can find the report here ($link)