Eric Toder

Institute Fellow

District Of Columbia

3 years ago
Eric Toder
Institute Fellow
Under the current tax system, nonprofit organizations are exempt from taxes on most of their income from investments. If they own corporate stock, however, they indirectly pay tax because corporate income tax is collected from the corporations in which they own shares. The same is true for pension plans and for individuals’ investments in 401(k) plans and other qualified retirement plans. By eliminating the corporate income tax, our proposal would give these tax-exempt shareholders an unintended tax cut. To offset this tax saving and provide a level playing field among alternative investment choices by tax-exempts, our proposal would impose a low-rate tax, maybe at a 15 percent rate, on the interest, dividends, capital gains, and business income of these shareholders. What changes, if any, should be made to this part of the proposal? See more

Eric hasn't commented yet.

3 years ago
Eric Toder
Institute Fellow
Under the current tax system, nonprofit organizations are exempt from taxes on most of their income from investments. If they own corporate stock, however, they indirectly pay tax because corporate income tax is collected from the corporations in which they own shares. The same is true for pension plans and for individuals’ investments in 401(k) plans and other qualified retirement plans. By eliminating the corporate income tax, our proposal would give these tax-exempt shareholders an unintended tax cut. To offset this tax saving and provide a level playing field among alternative investment choices by tax-exempts, our proposal would impose a low-rate tax, maybe at a 15 percent rate, on the interest, dividends, capital gains, and business income of these shareholders. What changes, if any, should be made to this part of the proposal? See more

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