2 ms·
> Why isn't it sufficient to tax the money when the owners of the corporation are trying to cash out through dividends or in some other way? Because failing to
by ethbr0 5y ago
> Why isn't it sufficient to tax the money when the owners of the corporation are trying to cash out through dividends or in some other way?
Because failing to tax capital formation in situ leads to all sorts of abuses.
Exhibit A: The entire security-based lending industry [0], which allows you to realize the benefit of appreciated stock price while retaining stock ownership and without triggering a taxable event
[0] https://www.investopedia.com/terms/s/securitiesbased-lending.asp https://www.investopedia.com/terms/s/securitiesbased-lending...
- Aerroon 5y agoBut those same abuses will happen anyway because we tax the corporations themselves and when the money is paid out from the corporation. Ie we will still have to deal with that exact same problem. It's just slightly smaller in scale.
- ethbr0 5y agoTaxing something vs not taxing it (while shareholders still receive a benefit) is a pretty large difference.