economic double taxation

Economic double taxation occurs when the same income is taxed more than once, typically in different stages. For example, a corporation pays taxes on its profits, and then when it distributes dividends to shareholders, those dividends are taxed again as personal income. This means that the same earnings are taxed first at the corporate level and again at the individual level. This situation can lead to a higher overall tax burden on the same income, which some argue can discourage investment and savings.