51 Pages Posted: 1 Sep 2013
Date Written: August 31, 2013
The choice of entity is always a key decision during business planning. However, it is often discussed only rudimentarily and largely focuses on the choice between having limited general liability with an additional liability for corporate income taxes, or having neither. There is little analysis and no theory to rationalize or guide the development of the relevant law. This essay aims to fill this gap in tax law scholarship, asking first whether this gap is meaningful, and then beginning to fill that gap with possible explanations of the choice of entity and its policy implications. It generally portrays a picture of unorganized thinking about the effect of the choice of entity rules on the market, which therefore results in a lacking normative organizing principle. Nonetheless, the essay diagnoses some tax policy dilemmas from the foregoing perspective that may contribute to a more educated and comprehensive tax policy discourse. Thus, the essay adds support to scholarship calling for the repeal of the corporate income tax and for formula based international tax reform.
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