From: =?iso-8859-1?q?Daniel=20Davies?= <d_squared_2002 at yahoo.co.uk>
- --- "Max B. Sawicky" <sawicky at bellatlantic.net> wrote:
> Much ado about nothing.
>
> What is deductible to the firm is taxable to the
> worker.
> It can't be taxable to both.
>
> mbs
>
David:
Not sure of this general principle -- dividends are double taxed, shurely?!
dd
Me: not true. Dividend money is taxed precisely once for each legal owner who gains posession of it, just like most things (such as the income which I give to another, which is subject to taxation for that person).
Shareholders have chosen to invest their money in corporations, rather than partnerships or other business organizations, to gain certain advantages. Namely, that the business is a legal person, and that it's actions bring only limited liability to the shareholders. The downside of this is that the transfer of dividends from one owner to another is a transfer of income, and gets taxed accordingly. This can be avoided by using other forms of doing business, and taking those costs (such as full liability).
Shareholders have chosen not to do this.
Of course, they still complain, because it would be nice to have all of the advantages of each form of business, and none of the disadvantages.
Barry