Who Earns Pass-Through Business Income? An Analysis of Individual Tax Return Data [October 24, 2017]   [open pdf - 725KB]

"Pass-through businesses--sole proprietorships, partnerships, and S corporations--generate more than half of all business income in the United States. Pass-through income is, in general, taxed only once at the individual income tax rates when it is distributed to its owners. In contrast, the income of C corporations is taxed twice; once at the corporate level according to corporate tax rates, and then a second time at the individual tax rates when shareholders receive dividend payments or realize capital gains. This leads to the so-called 'double taxation' of corporate profits. This report analyzes individual tax return data to determine who earns pass-through business income."