| Wouldn't apply to S-corps, as pass-through taxation from the company is applied at the owners' personal tax rate(s). But, indirectly, the biggest incentive that I can see would be with regard to retained earnings and reinvestment. For an S-corp, shareholders pay tax on profits according to their ownership percentage, irrespective of whether they even receive a distribution from those profits. And, if on Jan 1, the company invests all of its profit in a new project (essentially wiping out the profit), it doesn't matter. Prior year taxes are still due from shareholders at the full rate. This can generally lead to forced distributions to shareholders just so they can cover taxes. So, that's painful, especially for a business that's in growth/re-investment mode. Problem is, moving to a C-corp and being doubly-taxed at a 35% corporate rate, and again at a ~30% marginal personal rate is usually even more painful. So, yeah, a much reduced corporate rate might allow for a different calculus there that incentivizes me to organize as a C Corp vs. S Corp. Let the company take the 15% corporate tax hit and keep the 20% balance vs the old rate. Plus minimize dividends to keep the max amount of money in the company to re-invest. |
see my post above - at times trump has stated that this _would_ apply to pass-through entities (s-corps, sole proprietorships and LLCs). at the moment however, this point remains unclear.