Corporate profits are taxed, and then they are taxed again when they redistribute the dividends. Arguably, you get double-taxed if you own stocks.
Your employer makes money and is taxed. Some of the resulting money is given to you as payroll and is taxed.
Ok, granted, not all the money that the company has on hand that is paid into your salary is taxed as corporate income, but the idea is valid. I agree not at the same level as taxing profits and then taxing dividends which is essentially the same money.
I'm just going with the notion that it is not uncommon for money to be taxed as it is exchanged from one entity to another.
"Most people are taxed roughly 36% (28% income tax, 2% medicare, 6% social security) on their labor, however investments are only taxed at a flat 15%."
"Double taxation" may not be an entirely accurate label (more like "an additional pass of taxation"), but the fact that dividends (in particular) are taxed as corporate profit before being taxed as individual profit makes that 15% figure misleading for dividends, which is what the child comment brought up: "Arguably, you get double-taxed if you own stocks."
Really, the number of times the money is taxed is irrelevant (except wrt paperwork) and we should be looking at the total tax level, but the point is that it's more than the nominal tax rate on qualified dividends if we're going to be comparing tax rate on labor income to tax rate on non-labor income, apples to apples.
Of course, that's specifically for dividends; bond premium payments and capital gains are a different discussion.
> it reduces or eliminates the tax disadvantages of distributing dividends to shareholders by only requiring them to pay the difference between the corporate rate and their marginal rate.