Part 4 of a series about Taxing Businesses
This is an intriguing graph showing the decline of companies listed in the United States on the stock exchange. (These companies would be corporations whose's stocks are freely traded on a stock exchange, not pass-throughs).
The tax changes in the 80s provided a tax incentive to change the business structure from C corporation to pass-throughs like LLCs. Originally, the IRS was very strict as to when a business could be treated a pass-through entity, however, that changed on January 1, 1997. That is when you see the ratio of listed companies the stock exchange drop dramatically.
Data Notes: Federal Reserve Economic Data (FRED); Historical Data for listed companies The U.S. listing gap Craig Doidge, G. Andrew Karolyi, and René M. Stulz