Democrats' latest tax target: Private corporations

By: The Associated Press
By: The Associated Press

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.

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