While the federal government is facing serious budget shortfalls and making huge budget cuts, a new -report shows that one-third of corporations pay no income tax.
The Wall Street Journal reports that the number if corporations, who structure their businesses in such a way that helps them avoid higher taxes has skyrocketed over the past 25 years. The correct way to structure a business to reduce tax liabilities can be outlined by a highly-skilled tax attorney.
In 1986, roughly 24 percent of corporations where known as non-taxable businesses, meaning they did not pay taxes but instead pass income to individual investors to pay taxes. In 2008, 69 percent of corporations use this structure, which can save a company hundreds of millions of dollars each year.
Business community advocates have long criticized the 35 percent corporate tax rate calling it unreasonable high. However numerous loopholes and subsidies have helped lower their actual tax rates. Though a recent study by Citizens for Tax Justice determined the effective tax rate for 300 of the Fortune 500 companies is 18.3 percent, half of the effective corporate tax rate.
Taxes can be overwhelming to a small business and in order
to stay afloat they may need to cut corners. A tax lawyer can show them the loopholes and subsidies that are
available to them. Tax attorneys have special knowledge of the laws which can be
beneficial to corporations and small businesses alike.
