I'll probably show my ignorance in here somewhere.
I (think I) understand what a S-corp is. You get to organize your business as a corporation, with the benefits of that structure, but for tax purposes you eliminate the corporate layer of taxation. I think S-corps are also limited in the number of shareholders and maybe some other things.
And I think a C-corp is just the "regular" type of business.
But then every so often I hear that if we raise personal income tax rates and cut corporate rates, people will run to change S-corps to C-corps. But don't you always still have that extra layer of taxation? Don't you still have to pay the tax on dividends to get money out of the C-corp? Obviously if the difference between personal and corporate tax rates were high enough, it could be worth the 20% (23.8%?) to have a C-corp. But won't the bias always be strongly in favor of an S-corp?
(This post was triggered by long-standing wondering on my part, prodded by a article in today's New York Times about private equity firms reorganizing as C-corps instead of partnerships if the lose the carried interest preference.)