Subchapter G of the Internal Revenue Code: Crusade Without a Cause?
64 Pages Posted: 30 Apr 2006
This Article begins by tracing the evolution of the accumulated earnings tax and the personal holding company tax from their origins to the mid-1980s. The Article then demonstrates the limited extent to which these corporate penalty taxes serve their historical purpose of preventing taxpayers from enjoying significant tax savings through the use of the corporate form. Finally, the Article addresses whether the accumulated earnings tax and the personal holding company tax are appropriate and efficient mechanisms for inducing corporations to distribute their earnings when individual tax rates do not greatly exceed corporate tax rates.
Keywords: accumulated earnings tax, personal holding company, double taxation, corporate penalty taxes
JEL Classification: E62, H21, H25, H26, K34
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