The Oligarchs’ Big Prize in Trump’s Budget-Busting Bill
We are talking about oligarch money. When companies spend money for political applications, as they were invited to do by the executable of the Supreme Court Citizens United Decision in 2010, the companies in question are rarely publicly owned (that is to say the type that pays corporate tax), because shareholders are likely to oppose. Instead, business contributions generally come from S companies, partnerships and private limited liability companies (or LLC), where income passes to a very rich owner. The less these oligarchs pay on passing income, the more they have to buy politicians.
Ronald Reagan tax reform proliferated in 1986 reduced the highest marginal tax rate from 50% to 28%. This law also lowered the tax rate of companies, but not enough to interrupt a jostling of the public to private companies. (I am grateful for this story to Justin Fox de Bloomberg.) The advantage of passage has decreased in the following years due to various tax changes. But when Trump’s tax law in 2017 publicly dropped the corporate tax bill from 35%to 21%, the rich bloody murder depending on the passing pass also until the Congress also agrees to reduce taxes on passing income, with the 20%deduction. (Reason number I-lost-cound why it was stupid to reduce companies on companies in the first place.) The result was not, in fact, parity, mainly because the income generated by public companies are imposed twice (through corporate taxes and taxes on dividends or capital gains), while adoption income are only taxed once.
If a type of business structure must be favored by the tax system, it is public property. I am not a cheerleader for public companies, But they are generally preferable to private companies, because they are at least theoretically responsible for shareholders, including many retirees. And again, these are private companies that explain most of the political spending of companies Citizens United. But the trend takes place in the other direction; Between 1996 and 2020, the number of public companies narrowing of almost half.
You don’t need to be a rare heart to hate passing tax relief. The Kyle Pomerleau of the American Enterprise Institute cannot bear it on the grounds that tax policy should not promote one type of business structure compared to another. According to Fox, “it is difficult to find a tax expert of any political inclination which does not apply to the industrial passage complex who thinks that the deduction of qualified business income is a good idea.” A study in 2021 of the National Bureau of Economic Research revealed that the 2017 deduction on passes did not increase capital investments, wages or employment. During his first proposal, Daniel Savior, professor of law at New York University, called him “the worst provision never proposed to be seriously proposed in the history of federal income tax”.
