Part 3 of a series about Taxing Businesses

Combining the different scenarios from the previous two posts in the series, I highlighted the lowest marginal rate available to US businesses (one version with pass-though business income taxed as earned income the second taxed as unearned income). These graphs, showing how different business structures are taxed a different top rate and that the business structure that offered the lowest marginal rate has changed over a 99-years.

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Lowest Marginal Rate: Earned Income Scenario

  • After 1970, pass-through businesses taxed as earned income via the individual tax code offered the lowest marginal rate.
  • 1935-1939; 1952-1970 the lowest option was the effective top rate on C corporate profits & capital gains.
  • Before 1935; 1940-1951 the lowest option was the effective top rate on C corporate profits & dividends.

Taxing Businesses

Lowest Marginal Rate: Unearned Income Scenario

  • After 1981, pass-through businesses taxed as earned income via the individual tax code offered the lowest marginal rate.
  • 1935-1939; 1952-1981 the lowest option was the effective top rate on C corporate profits & capital gains.
  • Before 1935; 1940-1951 the lowest option was the effective top rate on C corporate profits & dividends.

Lowest Marginal Rate

Data Notes available in Part 1 and Part 2 in the series

Article by Visualizing Economics