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URL:  http://boards.fool.com/the-whole-quotdouble-taxationquot-is-a-26873094.aspx

Subject:  Re: Is your 401(k) Inadequate For Retirement Date:  8/4/2008  2:23 PM
Author:  SirTas Number:  13800 of 19378

The whole "double taxation" is a charade, a farce perpetrated by the haves against the have-nots.

The whole idea of "double taxation" has always struck me as odd too. Imagine if you went to a store and tried to buy goods tax-free with your pay -- because after all that money was already taxed, and to tax it again would be "double taxation."

The only possible comeback on the part of the stockholders I can see is that they are the owners of the corporation and so it's their money. (Corporate) tax was already paid when the money came into the corporation as profit. Now, the owners are just dividing the profit up.

But the problem with the is the structure of the corporation: the corporation is set up so that management can vote to issue you (the owner) dividends -- note that they don't have todo this, but they are could -- but they can't collect money from the owners/stockholders in order to pay off the debt of the corporation. The stockholders are not liable for corporate debt. Nor are they automatically entitled to dividends. But if they should receive dividends, if management votes to give them dividends, then the dividends are income to them, and their income is taxed.

--SirTas
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