Exempting Corporate Dividends From Individual Income Taxes

Old Blog Import

Is it unfair for corporate dividends to be taxed twice — as the Wall Street Journal claims? Well, first of all, much of corporate dividends aren’t taxed at all. Secondly, payroll is taxed twice and you don’t hear anyone complaining about that. As this report argues, why are two taxes of 10% less fair than one tax of 20%? The report is also worth reading for its critique of Bush’s current budget in terms of who actually benefits from it (Answer: only the very wealthy).

Supporters of eliminating the taxation of corporate dividends typically argue that such a change is necessary to end the double taxation” of these dividends. Double taxation arises because, in theory, corporations pay dividends out of their after-tax earnings, and these payments are subsequently taxed as part of the shareholders