Explaining the Perverse Impact of Double Taxation with a Chart

International Liberty

Whether I’m criticizing Warren Buffett’s innumeracy or explaining how to identify illegitimate loopholes, I frequently write about the perverse impact of double taxation.

By this, I mean the tendency of politicians to impose multiple layers of taxation on income that is saved and invested. Examples of this self-destructive practice include the death tax, the capital gains tax, and the second layer of tax of dividends.

Double taxation is particularly foolish since every economic theory – including socialism and Marxism – agrees that capital formation is necessary for long-run growth and higher living standards.

Yet even though this is a critically important issue, I’ve never been satisfied with the way I explain the topic. But perhaps this flowchart makes everything easier to understand (click it for better resolution).

There are a lot of boxes, so it’s not a simple flowchart, but the underlying message hopefully is very…

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About budbromley

Bud is a retired life sciences executive. Bud's entrepreneurial leadership exceeded three decades. He was the senior business development, marketing and sales executive at four public corporations, each company a supplier of analytical and life sciences instrumentation, software, consumables and service. Prior to those positions, his 19 year career in Hewlett-Packard Company's Analytical Products Group included worldwide sales and marketing responsibility for Bioscience Products, Global Accounts and the International Olympic Committee, as well as international management assignments based in Japan and Latin America. Bud has visited and worked in more than 65 countries and lived and worked in 3 countries.
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2 Responses to Explaining the Perverse Impact of Double Taxation with a Chart

  1. Jim Vist says:

    Your comments on double taxation are specious nonsense. If corporate tax was set at 4% or less, and we got rid of “individual” preferential tax treatment, (tax discounting), and then had a progressive tax code, not exceeding around 33%; we’d have that proverbial shiny city on the hill. It’s that very artificial inflating of stock PE values, and then the artificial appreciation of “used” real estate, resulting from the perverse lobbied for fed tax code; that has insidiously brought this country to the brink of ruin! Your speciousness is not recognizing the little common customer of the corp, stimulates and creates jobs too! Investors in stocks or real estate should pay tax at ordinary income tax rates, like any other type income! Now of course, also quit taxing the corporations, (which is really a hidden regressive sales tax).


    • budbromley says:

      First of all, the article is a repost. The links to the original are there. So, you might want to post your thoughts there. But, there is nothing specious about the double and triple taxation going on in America today. It is pernicious. Taxation in all cases is government taking the property of one man and giving it to another based on some formula. Some amount of taxation is necessary so that government can provide the functions authorized in the Constitution. Double and triple taxation is a artifact of that heavily-lobbied-for tax code which provides politicians with funds for re-distribution. C-corps pay taxes on their profits. Some C-corps (e.g oil companies) pay taxes on their revenues (i.e. excise taxes) as well as their profits. And then the investors in the stock of those C-corps pay taxes on the capital gains and on the dividends from those C-corps. And then finally, the C-corp rolls all those taxes into the prices of its products (if possible). It is the little consumer guy that is most harmed in this government-run ponzi scheme. The lowly consumer is already paying 3 federal taxes on that gallon of gas, and that is not counting state and local taxes. The only thing specious here is believing that our tax codes are progressive. It is an outright lie.


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