[callmeal]

>that's bad because the income is first taxed when the corporation declares it as income and then again when the shareholders receive the dividend.

Why is that bad? The first case is income to the corporation and they pay income tax on it. The second is income to the shareholder and they pay income tax on it. How is it different from the corporation's employees paying income tax on money received from the corporation?

>If instead you don't issue the dividend, but re-invest to grow the company, then the value of the shares can increase without creating a taxable event for the shareholders.

That's true as long as the shareholders never sell their shares. Once they do, it's a taxable event like the dividend.

[dmurray]

> How is it different from the corporation's employees paying income tax on money received from the corporation

The money paid to employees is only taxed once.

We (pretty much everywhere) tax companies on their profits, but individuals on their income. It seems unfair, it leads to some weird but accepted inequalities (like the cost of renting a house vs buying), but no alternative seems to work.