[beagle3]

> That's what double taxation means. You paid taxes twice on the earnings of $100k.

You paid 48% on the $100K, and that is all that matters in the end - the fact that it was a two step process, and that different steps have different credit/exemptions consideration is not really important.

And you generally can pay just your marginal rate - don't set up a corporation, and list everything on your own return - singular taxation goodness!.

However, no one likes to do that, because it makes them personally liable. So actually the higher rate (which people like to call "double taxation" even though that's not informative) turns out to be the fee you have to pay to separate your finances and legal status from the business - and by the fact that the vast majority of businesses choose it indicates that, in general, it's not expensive and might even be too cheap for what it provides.