Tax Foundation Finds that High Individual Income Tax Rates Deter Businesses

September 6, 2013

High individual income tax rates negatively impact businesses according to a new study from the Tax Foundation. They point to statistics that show, “tremendous growth in non-corporate business forms over the past thirty years.” This growth has led to an overwhelming number of businesses claiming income as an individual, not as a corporation, on their tax returns.

The Tax Foundation refers to these as “pass-through” businesses. Recent data finds that there are nearly 35 million pass-through businesses in the country, and they can see marginal income tax rates over 50 percent.

Wisconsin took a very important first step in lowering income taxes in the 2013-2015 budget, but they still have a long way to go. According to the Tax Foundation, sole proprietorships face a 48.4 percent marginal tax rate in the Badger State. That ranks Wisconsin as the tenth highest in the nation.

Read the full study here.