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Are most businesses organized as 'traditional' C-corporations?

By EconoFact
NO

Most well-known major companies, and all publicly traded companies on U.S. stock exchanges, are a type of corporation called a C-corporation. However, in 2015, 95% of businesses were actually so-called “pass-through” entities — accounting for 63% of all business income that year. Pass-through entities include sole proprietorships, S-corporations, and partnerships. Unlike C-corporations, whose profits are taxed at the corporate tax rate, the profits of pass-through entities are “passed through” to owners and taxed as owner’s income under the personal income tax. Pass-through entities enjoy more favorable tax treatment than C-corporations and this is one major reason why they are so prevalent. One study finds that the growth in pass-through entities since the 1980s cost the federal government $100 billion in tax revenue per year (before the 2017 Tax Cuts and Jobs Act). 

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EconoFact is a non-partisan publication designed to bring key facts and incisive analysis to the national debate on economic and social policies. Launched in January 2017, it is written by leading academic economists from across the country who belong to the EconoFact Network. It is published by the Edward R. Murrow Center for a Digital World at The Fletcher School at Tufts University.
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