On August 27, 2010, the President’s Economic Recovery Advisory Board (PERAB) issued a report on tax reform, titled “The Report on Tax Reform Options : Simplification, Compliance, and Corporate Taxation.” The report includes a section, beginning on page 74, on “reviewing the boundary between corporate and non-corporate taxation,” and the discussion of possible changes to that boundary includes taxation of PTPs (or more narrowly, of investment management PTPs, as in the carried interest legislation), or extending corporate taxation to currently non-taxed entities based on other criteria such as size or income. This is not surprising, as the report is intended as a thorough review of all potential means of simplifying and reforming the tax system, and corporate vs. non-corporate taxation of businesses is bound to come up in such a review. The discussion is relatively neutral, pointing out both the advantages and disadvantages of such a change.
it is important to stress that the report is not intended to recommend specific proposals but, as stated in the introduction, “to provide helpful advice to the Administration as it considers options for tax reform in the future. The report does not represent Administration policy.” [emphasis added]. With bipartisan agreement on examining tax reform during the 112th Congress, it will be the Association’s goal to keep such an option from becoming the policy of any branch of government.
To see the PERAB report, click here.