Why Are Dividends Taxed Twice?

A taxation principle referring to income taxes that are paid twice on the same source of earned income. Double taxation occurs because corporations are considered separate legal entities from their shareholders. As such, corporations pay taxes on their annual earnings, just as individuals do.
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There is a double taxation problem with dividends. In fact, the United States has one of the highest taxes on dividends in the entire world because we don't allow corporations to deduct dividends paid out to owners from corporate income tax rates.
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Conservatives claim that income from corporate dividends is "taxed twice" -- first when the corporation pays its taxes (if it does pay taxes), and then when the recipient of dividends pays t
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What is double taxation? Does it mean that corporate income is taxed twice?

Learn the benefits and drawbacks of corporate taxation.