III 

112TH CONGRESS 

1ST SESSION S. RES. 88 

Expressing the sense of the Senate that businesses of the United States 

should retain the option to organize as those businesses choose, including 

as flow-through entities, and not be forced to reorganize as C corporations. 

IN THE SENATE OF THE UNITED STATES 

MARCH 3, 2011 

Ms. SNOWE submitted the following resolution; which was referred to the 

Committee on Finance 

RESOLUTION 

Expressing the sense of the Senate that businesses of the 

United States should retain the option to organize as 

those businesses choose, including as flow-through entities, and not be forced to reorganize as C corporations. 

Whereas the tremendous growth in businesses organized as 

flow-through entities, including S corporations, has resulted in the number of flow-through entities far exceeding the number of C corporations; 

Whereas there are more than 26,000,000 businesses operating as flow-through entities in the United States, representing 82 percent of all United States businesses, relative to just 5,900,000 C corporations; 


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•SRES 88 IS 

Whereas these flow-through and small businesses create 70 

percent of all new jobs and are responsible for 44 percent 

of the total private payroll in the United States; 

Whereas under the Internal Revenue Code of 1986 as in effect in March 2011, these job-generating businesses are 

taxed at individual tax rates based on the individual income of the business owners, making these businesses 

highly sensitive to changes in individual tax rates; 

Whereas as of March 2011, 50 percent of all income above 

$250,000 is attributable to flow-through businesses; 

Whereas, if individual tax rates increase after 2012 in accordance with the proposals set forth by the President, 

flow-through businesses will face a massive aggregate tax 

increase, potentially in excess of $800,000,000,000; 

Whereas the Secretary of the Treasury has proposed forcing 

flow-through entities to reorganize as C corporations to 

make them subject to double taxation as a way to impose 

more taxes on these businesses in order to pay for the 

budgetary policies of the President; and 

Whereas forcing corporate reorganizations for purely taxdriven reasons represents a misguided incentive, a 

misallocation of precious business resources, and a serious threat to job creation: Now, therefore, be it 

1 Resolved, That it is the sense of the Senate that— 

2 (1) the Federal Government should preserve the 

3 organizational options available for businesses to op4 erate as the businesses choose, including as flow5 through entities; 


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•SRES 88 IS 

1 (2) raising taxes on businesses that create jobs 

2 will be detrimental to the economic recovery of the 

3 United States; 

4 (3) generating increased tax revenue on the 

5 backs of the small businesses of the United States 

6 is inconsistent with, and will impede, job creation; 

7 and 

8 (4) any legislative approach to comprehensive 

9 fundamental tax reform should include a debate on 

10 the individual rates at which most businesses in the 

11 United States should be taxed, rather than narrowly 

12 focusing on corporate tax rates or forcing small 

13 business owners into corporate status for tax pur14 poses. 

Æ 


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