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I think it could be either way, but many object to the fact that it is both. In other words, corporate tax is seen as double taxation, since the earnings (afte

I think it could be either way, but many object to the fact that it is both. In other words, corporate tax is seen as double taxation, since the earnings (after taxes) are then passed on to shareholders, who pay tax on it again. I could see a coherent tax code that taxes corporations, but not individuals, or one that taxed individuals, but not corporations (Of course with either of these there would no doubt be all sorts of new loopholes to deal with). But taxing both seems odd to me.

jjoonathan 11y ago
If there are loopholes allowing corporations to not actually pay their taxes and the capital gains tax rate is a fraction of the income tax rate, is it really fair to call it double taxation?
samuellevy 11y ago
I'm not sure how the tax system works in the US, but I was just talking to my accountant about this issue the other day. In Australia, my company gets taxed at a flat 30% on all profits in a year. If I want to take cash out of the company after that tax has been taken, I pay "top-up" tax that brings the total tax paid to the level of my income tax rate. For example, if the company earned $10000, after all expenses, then it would pay $3000 in tax, leaving $7000 left that I can take out. If I earned no money in the year, my income tax rate is 0%, so the top-up tax is -$3000 (I.e. I get a tax refund for $3000). If I earned $50000 in the year, then my income tax rate is 32.5%, so I would have to pay top-up tax of $250 (I.e. 2.5% of the original $10000, which has already been taxed 30%). Double taxation shouldn't happen, and while my company was set up for tax minimisation purposes, international corporations are able to do an insane level of fuckery to avoid almost all taxation.
GFK_of_xmaspast 11y ago
By the double tax hypothesis, how come then I have to pay sales tax on things I buy using money I earned from income that's already been taxed.
- ryandrake 11y ago
  It's only considered "double taxation" when the tax hits wealthy people[1] 1: http://assets.amuniversal.com/921b06d016420130ff2c001dd8b71c47 http://assets.amuniversal.com/921b06d016420130ff2c001dd8b71c...
- evunveot 11y ago
  Sales taxes are deductible in the US, sort of. You can deduct either state and local sales taxes or state and local income taxes. No idea what the rationale for that is, but if you live in a State with no or very low income tax and deduct your sales taxes, it's kind of like you're not getting taxed twice. http://www.irs.gov/Individuals/Sales-Tax-Deduction-Calculator http://www.irs.gov/Individuals/Sales-Tax-Deduction-Calculato...
tomp 11y ago
Isn't double taxation really a choice that the owners make? I.e. an unlimited liability company wouldn't be taxed twice. In essence, corporate tax is a fee for the legal protection given by a corporation/limited liability entity.

jjoonathan 11y ago

If there are loopholes allowing corporations to not actually pay their taxes and the capital gains tax rate is a fraction of the income tax rate, is it really fair to call it double taxation?

samuellevy 11y ago

I'm not sure how the tax system works in the US, but I was just talking to my accountant about this issue the other day. In Australia, my company gets taxed at a flat 30% on all profits in a year. If I want to take cash out of the company after that tax has been taken, I pay "top-up" tax that brings the total tax paid to the level of my income tax rate. For example, if the company earned $10000, after all expenses, then it would pay $3000 in tax, leaving $7000 left that I can take out. If I earned no money in the year, my income tax rate is 0%, so the top-up tax is -$3000 (I.e. I get a tax refund for $3000). If I earned $50000 in the year, then my income tax rate is 32.5%, so I would have to pay top-up tax of $250 (I.e. 2.5% of the original $10000, which has already been taxed 30%). Double taxation shouldn't happen, and while my company was set up for tax minimisation purposes, international corporations are able to do an insane level of fuckery to avoid almost all taxation.

GFK_of_xmaspast 11y ago

By the double tax hypothesis, how come then I have to pay sales tax on things I buy using money I earned from income that's already been taxed.

ryandrake 11y ago
It's only considered "double taxation" when the tax hits wealthy people[1] 1: http://assets.amuniversal.com/921b06d016420130ff2c001dd8b71c47 http://assets.amuniversal.com/921b06d016420130ff2c001dd8b71c...
evunveot 11y ago
Sales taxes are deductible in the US, sort of. You can deduct either state and local sales taxes or state and local income taxes. No idea what the rationale for that is, but if you live in a State with no or very low income tax and deduct your sales taxes, it's kind of like you're not getting taxed twice. http://www.irs.gov/Individuals/Sales-Tax-Deduction-Calculator http://www.irs.gov/Individuals/Sales-Tax-Deduction-Calculato...

tomp 11y ago

Isn't double taxation really a choice that the owners make? I.e. an unlimited liability company wouldn't be taxed twice. In essence, corporate tax is a fee for the legal protection given by a corporation/limited liability entity.