Jeffrey L. Kwall (Loyola-Chicago) has published The Repeal of Graduated Corporate Tax Rates, 131 Tax Notes 1395 (June 27, 2011). Here is the abstract:

Section 11 applies a bracket system to corporations, imposing lower tax rates on lower amounts of income. Similarly, § 1 applies a bracket system to individuals, which is intended to adjust the tax rate to the taxpayer’s standard of living. Modest and subsistence incomes bear little or no income tax. Higher incomes bear tax rates as high as 35%. By contrast, the bracket system of § 11 bears no relation to standards of living. Corporations are artificial entities that do not have variable standards of living. Moreover, the income level of a corporation bears no relation to the shareholders’ standards of living. The § 11 bracket system may induce privately held businesses to incorporate because it effectively provides corporations with high-income shareholders in the top individual tax bracket access to two sets of low tax brackets, one under § 1 and a second under § 11.

This proposal would repeal the lower tax brackets in § 11 and apply the top corporate rate, currently 35%, to all corporations. This change would eliminate the incentive for business owners to incorporate to receive the lower corporate tax rates. More significantly, repealing the lower corporate marginal rates could increase annual tax revenue by an estimated $3 billion.

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