Double Taxation

Double taxation is a business reference to the fact that earnings from a corporation are taxed twice for income tax purposes based on the Internal Revenue Code. The first tier of taxation is at the corporate income tax rate; once the earnings are paid as dividends to owners, owners pay an income tax on this value too; thus the 2nd tier or doubling of taxation.

Double Taxation – Not an Issue in Small Business

Double Taxation

In the world of big business corporate earnings are taxed twice under the Internal Revenue Code.  The first layer of taxation occurs with the traditional corporate income tax.  The second tier of taxation happens when dividends are issued to shareholders.  The shareholder pays an income tax at their personal rate. 

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