[PaulDavisThe1st]

For the hundredth time, it is not double taxation.

Money is taxed (generally) whenever it moves between parties. You paid tax on your income; you give (some of) it to someone else for goods or services - they pay taxes on it again. That's not double taxation, that's how tax works.

Money flows to the corporation. They pay some to employees, who pay tax on their income. They (might) pay some to shareholders, who (might) pay tax on dividends or capital gains. What is left (very simply speaking), the corporation pays tax on as its income.

[gamblor956]

It definitely is double taxation. (1st level: corporation, 2nd level: shareholders).

But the point is that the owners accept double taxation in exchange for the protections of the corporate form, like a legal liability shield, treatment of ownership interests as capital assets subject to lower tax rates on sale, deferral of taxation of shareholders' allocable shares of the business' income (as represented by dividends), etc.

A corporate tax rate is good policy. The answer to how high that tax rate should be has split families and friends for decades. Higher corporate tax rates drive substantially increased R&D spending and capital investments (and it's not even close; its easily 4x-5x the amount invested when corporate tax rates are low). This apparent paradox is quite easy to explain: when corporate tax rates are high, corporations will increase their spending on deductible categories to reduce their taxable income, and thus the tax they pay. When tax rates are low, there's little to no incentive to due that.

[UmGuys]

The corporation and shareholders aren't the same entity. How is N entities paying N taxes double tax?

[monero-xmr]

Why would I want taxes to paid every single time it moves from entity A to entity B? All you do is decrease economic activity, in the aggregate, in a negative compounding loop

[antisthenes]

Because if you don't pay taxes for infrastructure and public services, economic activity doesn't just decrease, it grinds to a halt.

[monero-xmr]

Why would shifting the taxation burden to people rather than corporations eliminate infrastructure and public services?

[ummmzokbro]

It very much is double taxation and to state otherwise seems disingenuous.

Taxing corporate profits is layering an additional (hefty) tax on its beneficiaries - people.

Search 'double taxation' and you will see this term is generally accepted by financial professionals in many jurisdictions to describe the above scenario where a corporation makes a profit, is taxed at the corporate level and then additional taxes must also be paid by the receiver of the already taxed funds (ex. shareholder, bondholder).

[PaulDavisThe1st]

It is generally accepted by financial professionals with a particular political and ideological outlook on the tax system.

You do some work, you earn income, which presumably (or hopefully) exceeds your perception of the cost of doing the work to you. You pay taxes on that. You then give the money to some third party, as a gift, for goods & services, to repay a debt, or whatever reason. Subject to the stipulations of the tax code, the recipient pays taxes on whatever they receive (e.g. for gifts there is a threshold, for debts they will pay tax only on the interest received etc. etc.). Nobody calls this double taxation.

A corporation does what it does, earns income, which hopefully exceeds the cost of doing whatever it is that it does. They pay taxes on that. They then give the money to some third party, as a dividend or bond repayment or whatever other reason. Subject to the stipulations of the tax code, the recipient pays taxes on whatever they receive. Some people try to call this double taxation.

Trying to dress this up with concepts like "the shareholders receive the profit, but taxes have already been paid on that" is just missing the point entirely: our tax system taxes money when it moves, not based on how it is labelled (at least when it works as intended).

[immibis]

Actually it's a quadruple tax system since when you give your income to a plumber the plumber pays tax and when the plumber gives the income to his landlord the landlord pays tax.

[2Gkashmiri]

Yes because there are multiple people.

You.

Plumbler.

Landlord.

Each person is a different person and pays income tax on "their income"

[PaulDavisThe1st]

If shareholders are the same legal person as the corporation, what is the purpose of the corporation?

If the corporation shields the shareholds from many forms of liability, why should the shareholders be able to claim the same personhood when it comes to income and taxation?

If corporations are said to be able to have moral and religious beliefs (thanks, SCOTUS), and yet their shareholders are free to have other, different beliefs, how can they considered the same person?

[2Gkashmiri]

no. shareholders are not usually the same legal person.

a corporation is a distinct "legal person" because it goes through "incorporation" which breathes a legal life into a concept.

a person does, a corporation has legally perpetual existence because the shareholders can endlessly transfer their shares to other persons and on death the shares are given as inheritance.

[PaulDavisThe1st]

In which case, when the company distributes profits to shareholders, that is a transfer between people, and is taxed like other similar transfers. There is no double taxation - the company (one legal person) is taxed on income/profit, the shareholders (different legal persons) are taxed on the money they receive from the company.

[immibis]

Are corporations people?

[2Gkashmiri]

legal persons, yes edit: because they can sue and be sued in a court of law. you cannot sue "god" or "gravity" or "Pythagoras theorum"