Business in the United States: Who Owns It, and How Much Tax Do They Pay?. Cooper, M., McClelland, J., Pearce, J., Prisinzano, R., Sullivan, J., Yagan, D., Zidar, O., & Zwick, E. Tax Policy and the Economy, 30(1):91–128, University of Chicago Press, 2016.
Business in the United States: Who Owns It, and How Much Tax Do They Pay? [link]Link  doi  abstract   bibtex   2 downloads  
``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.
@article{Cooperetal2016,
  title = {Business in the United States: Who Owns It, and How Much Tax Do They Pay?},
  author = {Cooper, Michael and McClelland, John and Pearce, James and Prisinzano, Richard and Sullivan, Joseph and Yagan, Danny and Zidar, Owen and Zwick, Eric},
  year = {2016},
  journal = {Tax Policy and the Economy},
  volume = {30},
  number = {1},
  pages = {91--128},
  publisher = {{University of Chicago Press}},
  doi = {10.1086/685594},
  url = {https://doi.org/10.1086/685594},
  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.},
  keywords = {Wealth Taxation}
}
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