Kilroy Was Here
January 07, 2003
What Is Wrong With Double Taxation?
Today President Bush has announced is new Economic Stimulus Package. The centerpiece to this strategy is the elimination of the dividend tax. In justification for this, the White House stated the following:

It is fair to tax a company's profits, and under the President's plan, company profits will still be taxed but only once. It is not fair to tax this income twice by taxing the shareholder on those same profits. Double taxation is wrong - and it falls hardest on seniors.

I am not convinced. I do not see why double taxation is inherently unfair. Consider the following two scenarios.

We have two laws that tax income. Under the first law, my income is taxed at 15%. Under the second law, my income is taxed at 25%. Total income tax is 40%

We have one law that taxes income. Under this law my income is taxed at 40%.

While I may object to a hire tax burden, I don't see any difference in terms of fairness between these two scenarios.

Republicans have been very good imbuing value neutral or empty phrases with moral significance. In taxation, you have the twin pillars of the "death penalty" and the "marriage penalty." Could double taxation be the next new thing for Republicans?

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