You may have heard the term “double taxation” and wondered what it means. Corporate shareholders often complain that they are being “double taxed.” But what really is double taxation and how unfair is it?
What is Double Taxation?
Double taxation is a term used to describe the way taxes are imposed on corporate shareholders and on corporations. The corporation is taxed on its earnings (profits), and the shareholders are taxed again on the dividends they receive from those earnings.