[lefstathiou]

Thought experiment here but I think there may be an argument for no taxes on a business by flowing the taxes through to personal income. Double taxation creates incentives that I don't think are good for small businesses on a systemic level.

Here is why: as a business owner I face a 40% tax rate at the corporate level and then 35% on personal income. I am thus highly incentivized to keep profit in the business and reinvest it or look for growth opportunities rather than distribute it to myself and our other shareholders.

Now imagine you are Sam Walton of Walmart. You stumbled upon a fantastic business model that prints money (or your Apple sitting on $250bn in cash). On the margin you will always opt to reinvest the money in the company or at least let it sit there unspent (i.e. Apple/Google/Msft) if the alternative means paying an incremental tax on it. So what do you do? Grow grow grow.

Anyway just wanted to share my thoughts. I am not trying to be controversial... I believe that long term sustainable health of an economy is predicated on the health of small businesses. I genuinely believe double taxation may have a potentially perverse incentive and negative outcome on a society simply by the way it alters my own decision making and incentives.

[cylinder]

If in the US and a small business owner you should use S-corp taxation to avoid that. But yes small business has too many challenges in the US, it's the land of megacorp dominance.