Originally Posted by stevepra
I understand the concept of double taxation. Explain it to me in a way that makes it sound less stupid to complain about dividends being double taxed.
There a lot of ways to explain it, but maybe the simplest is that investments in corporate equity face a much higher effective tax rate than economically similar investments in corporate debt or partnership equity.
You can also consider that the corporate tax raises a considerable amount of money. Since taxes must fall on individuals, and all individuals have their income taxed on an individual basis, the corporate tax must be a double tax on somebody, though economists argue about who exactly pays it.