Quote:
Originally posted by Captain
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.
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The question is not whether the government has the power to tax this income, but rather, whether it should. The only way this cannot be viewed as double taxation is if you really view the corporation separate and apart from its owners. The corporation (or other entity) pays a tax on its income. But really, the individual owners of the corporation are each paying a portion of that tax based on their percentage ownership. When the owners also pay a tax on the amounts that are dividended up, it is a second tax on the same income.
Wonk, I know you are in favor of the dividend tax, but are you really taking the position it is not double taxation?
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