Business in the United States: Who Owns it and How Much Tax Do They Pay?

Michael Cooper, John McClelland, James Pearce, Richard Prisinzano, Joseph Sullivan, Danny Yagan, Owen Zidar and Eric Zwick

No 21651, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: “Pass-through” businesses like partnerships and S-corporations now generate over half of U.S. business income and account for much of the post-1980 rise in the top- 1% income share. We use administrative tax data from 2011 to identify pass-through business owners and estimate how much tax they pay. We present three findings. (1) Relative to traditional business income, pass-through business income is substantially more concentrated among high-earners. (2) Partnership ownership is opaque: 20% of the income goes to unclassifiable partners, and 15% of the income is earned in circularly owned partnerships. (3) The average federal income tax rate on U.S. pass- through business income is 19%|much lower than the average rate on traditional corporations. If pass-through activity had remained at 1980's low level, strong but straightforward assumptions imply that the 2011 average U.S. tax rate on total U.S. business income would have been 28% rather than 24%, and tax revenue would have been approximately $100 billion higher.

JEL-codes: D31 D33 E25 E62 H2 H22 H25 M2 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-acc, nep-mac, nep-pbe and nep-pub
Note: CF IO PE
References: View complete reference list from CitEc
Citations: View citations in EconPapers (27)

Published as Business in the United States: Who Owns It, and How Much Tax Do They Pay? , Michael Cooper, John McClelland, James Pearce, Richard Prisinzano, Joseph Sullivan, Danny Yagan, Owen Zidar, Eric Zwick. in Tax Policy and the Economy, Volume 30 , Brown. 2016

Downloads: (external link)
http://www.nber.org/papers/w21651.pdf (application/pdf)

Related works:
Chapter: Business in the United States: Who Owns It, and How Much Tax Do They Pay? (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:21651

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w21651

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().