Quote:
Originally posted by sgtclub
Under that theory, it should be taxed at the difference between the corporate tax rate and the individual tax rate. The income has already been taxed at the corporate level, right?
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Depends on whether the income is based on dividends or is from selling interests (as in the private equity example). If the latter, no, there hasn't been any tax at the corporate level.
Even in the dividend example, I wonder if income was fully taxed at the corporate level. I seem to remember a lot of complaints that corps were issuing dividends and yet their various write-offs, shelters, etc. helped them avoid any taxes in the first place.
If we were truly concerned about double taxation, and not just about giving extra breaks to passive income, then I would think the right approach would be to tax dividends to the shareholder just like any other income, but to allow the corporation to deduct any dividends (or, at least, any dividends to shareholders subject to US income tax) from their taxable income.
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