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It very much is double taxation and to state otherwise seems disingenuous. Taxing corporate profits is layering an additional (hefty) tax on its beneficiaries
by ummmzokbro 1y ago
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 1y agoIt 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 1y agoActually 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 1y agoYes because there are multiple people. You. Plumbler. Landlord. Each person is a different person and pays income tax on "their income"
- immibis 1y agoAre corporations people?
- 2Gkashmiri 1y agolegal persons, yes edit: because they can sue and be sued in a court of law. you cannot sue "god" or "gravity" or "Pythagoras theorum"
- PaulDavisThe1st 1y agoIf 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 1y agono. 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 1y agoIn 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.