WASHINGTON (AP) — First it was people earning $1 million a year. Now Democrats may have found their next election-year target for tax increases on better-off Americans: owners of many privately held corporations.
A Senate Democratic aide says lawmakers are considering trying to make it harder for owners of so-called S corporations to avoid paying some Social Security and Medicare payroll taxes.
S corporations are a common way of forming a business for many professional firms, like doctors' and lawyers' offices, and for construction, real estate and retail companies. There are more than 4 million of them in the U.S.
A 2009 report by the Government Accountability Office estimated that in 2003 and 2004, S corporation owners underreported their wages by $24 billion, possibly resulting in billions in tax underpayments.