PRESIDENT DONALD TRUMP broke with conference by not releasing his tax returns during his campaign for office. One reason might be his involvement in around 500 “pass-through” firms. The profits (and losses) of such businesses,unlike those of traditional corporations, flow directly onto the tax returns of their owners. So Mr Trump has wonderful reason to pay attention as Republicans in Congress try to decide how such firms should be treated.
Rich countries typically allow sole traders to pay income rather than business taxes—assume of taxi drivers and handymen. America is unusual in also offering this option to large firms. So-called S-corporations, or one type of pass-through entity,can be enormous. FMR, the parent company of Fidelity, and an asset manager with $2.4trn under management and 45000 employees,is reportedly an S-corporation. So are many sports teams. The main requirements for the status are that a firm issues only one type of share and has no more than 100 shareholders, all of whom must be tax resident in America. Owners devour...
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Source: economist.com