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Corporate income fix

A recent editorial on corporate tax rates indicates three changes to the tax structure to deal with problems in the existing system (“Encouraging dialogue taking place concerning corporate tax rate,” Jan. 28). The three changes: (1) lowering corporate tax rates, (2) eliminating loopholes and (3) eliminating duplicate taxation of corporate earnings now occurring through personal taxation of dividends and capital gains. That left the inequality of taxation between C-corps and S-corps without a proposed solution.

A possible answer to this remaining problem is, in essence, treating all corporate income as pass-through. Let’s call the idea “ACES” for Allocated Corporate Earnings System. With modern computer capabilities and corporations’ knowledge of their stock ownership day to day, earnings could be allocated to shareholders on a share-day basis. Then the shareholder would pay taxes on his share of the corporate income at his personal rate — much more equitable than the present structure, and the unfairness of treatment between “Main Street” and “Wall Street” businesses would be removed.

Sen. Orrin Hatch, in his new position on the Senate Finance Committee, should learn more about this ACES concept. It could lead to the most important legacy of his career!

John Nagel

Holladay