Quote:
Originally posted by taxwonk
Dividends are only double taxation if you accept the argument that they should not be taxed at both the corporate and shareholder level. If corporations can no longer deduct wages, why should they, in effect, be able to deduct dividends? Either everything gets taxed in each taxpayer's hands, or nothing gets taxed in each taxpayer's hands.
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Isn't the question here more fundamental than a tax question? The government has determined that it has the power to establish separate entities, whether they are corporations, partnerships or limited liability companies, and bestow them with special privileges. These special privileges benefit those who invest, whether by limiting their liability or providing them with the ability to sell interests in a market as a mere investment, and the question is, should there be any payment for these privileges?
The battle over whether incorporation would be available to all or a privilege only for the established few was one of the big battles fought by Jacksonian Democrats, but I think they would be horrified at the idea that people could avail themselves of the privilege of incorporation without any benefit accruing to the public. Casting this as a "double taxation" issue seems to assume an inalienable right to incorporate.
