Changes in income tax rates.

• Author: Fay, Jack R.
• Position: Brief Article

In the U.S., income tax rates over the years have primarily been affected by economic requirements (to stimulate the economy or slow down inflation), social needs (to make a fairer tax system) and partisan politics. Given the frequent changes in the maximum individual rate (shown in the table on page 767), tax planning has always been rather challenging for those trying to decide whether to operate a business as a sole proprietorship, partnership, or S or C corporation. Switching a business from one organization form to another is a costly process. Business owners would certainly be helped by a law requiring maximum individual rates (as well as maximum corporate rates) to remain the same for...