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The dividend deduction avoids double-taxation, that should be obvious. The dividend-issuing organization pays taxes on its income; that income is then distribut
by xkcdxckd 3y ago
The dividend deduction avoids double-taxation, that should be obvious. The dividend-issuing organization pays taxes on its income; that income is then distributed effectively post-tax (although the exact % dividend deduction depends on ownership percentage).
Why should a parent corporation have to pay taxes twice just because of its corporate structure?
- samus 3y agoSuch corporate structures are often set up for the express purpose of optimizing tax. Replacing corporate tax with dividend tax would remove incentives from setting up such structures, which is a good thing. Apart from that, double taxation is a reality for natural persons since they have to pay income tax and VAT. Corporations are usually not subject to the latter.