Fairness of taxes called into question.
In the universe of taxation, there are many subsets--for example, federal corporate income tax, state corporate income tax, federal individual income tax and state individual income tax. Likewise, corporate taxable income is a subset of corporate earnings and profits. By short definition, dividends generally are cash distributions of previously taxed earnings and profits. Therefore, to tax dividends at any level is to tax previously taxed income.
Regarding stockholders, to assert "they simply own a piece of paper that entitles them to a share of net assets on dissolution and to dividends if corporate management declares any" is simply to ignore the whole truth. Stockholders own a current, undivided interest in the net assets of the corporation. They also have, but are not limited to, the rights to vote for and replace the board of" directors (management), to approve the auditors and to vote on other issues reserved solely to their discretion.
Frank L. King, CPA
|Printer friendly Cite/link Email Feedback|
|Author:||King, Frank L.|
|Publication:||Journal of Accountancy|
|Article Type:||Letter to the Editor|
|Date:||Feb 1, 2004|
|Previous Article:||High score for JofA.|
|Next Article:||Income, not dividends, double-taxed.|