Document Type


Publication Title

Buffalo Law Review



Publication Date



Economy, United States Tax System, Income Tax Law, Double Taxation of Corporate Profit, Shareholders, Economic Stimulus, Equity Investment


The more one reads about our economy, the more one is baffled and alarmed. Permanent solutions to economic problems are elusive. Treating one financial malaise often aggravates another sector of the economy, necessitating a delicate balancing of conflicting interests. Furthermore, the problems are complicated by the constant influence of foreign forces. Nevertheless, most economists agree that any solution will require enormous funding. Unfortunately, the public has little, if any, confidence in our tax system. Indeed, some tax laws and proposals have been referred to as "obscene" and a "disgrace to the human race." Few quarrel with the aptness of such general descriptions; however, there is much disagreement over which specific tax provisions warrant such criticism. In this author's opinion, one of the most inexcusable anomalies of our income tax laws is the double tax on corporate profits that arises from taxing the same income as it is earned by a corporation and again when it is distributed to its shareholders. This article will discuss the merits of double taxation of corporate profits. This discussion may appear to be of minor importance in comparison with the enormous economic challenges we face in the next decade. The topic assumes major significance, however, when one considers that increased equity investment is a cornerstone of capital formation, which to a great extent, can provide the economic stimulus essential to our national survival.