Not perfectly sure about US tax system, but as far as I understand the basics are similar everywhere. Corporate tax or profit tax is paid, well, on profit and s

Not perfectly sure about US tax system, but as far as I understand the basics are similar everywhere. Corporate tax or profit tax is paid, well, on profit and since salaries are sort of "operational expenses" are not subject to corporate taxes. Having profits corporations can effectively do two things (using many different mechanisms): pay dividends or reinvest. As I see it, dividends are income and should be taxed as such - corporate tax plus capital gains tax should at least equal plain income tax so different means of income are not discriminated. In this light, having profits and dividends taxed separately effectively discounts taxes on reinvested profits.