Double taxation is pretty simple. A company you invest in makes money and that money is taxed at the corporate rate of 35%. The profits which have just been taxed are sent to you in dividends. Guess what? You now pay taxes on the already taxed profits of the company for which you own a share through your stock ownership. That is double taxation.
Let’s take another view from the savers, you and I. Let’s say you make $100,000 and you pay taxes of $33,000 and you invest the $67,000 in the stock market. Each year you earn 5% or $3,350 on the $67,000. After one year you have now paid $36,350 on the $100,000 you earned or 36.35%. After two years you have paid $39,700 or 39.7%. After five years, well you are up to 49.75%.
Not fair is it.