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Comment by djbebs | Hacker News Reader

Because businesses are owned by people who in turn are taxed.

In effect any corporation tax is a double tax.

> In effect any corporation tax is a double tax.

There are a whole host of corporate entities which allow for pass-through taxation: LLC, S-Corp, sole proprietorships, and the like. I'd be surprised if European countries didn't have similar mechanisms.

Believe it or not, they mostly don’t. It tends to be fairly binary. Corporations have legal personality, including separate tax identity, so no pass-through taxation. Sole proprietorships have pass-through taxation, but no legal personality (incl. no limit to liability).

Intermediate entities like LLCs are a relatively recent Americanism that’s unusual in the rest of the world.

sole proprietorships are taxed at personal income level but pay pension contributions and/others at a % level, the game became unwhorthy at six figures levels. the way out are paying the lifestyle like SUVs with company funds (deductibles) and if worthy setting paper boxes to pay lower taxes. Example: San Marino offeres Trust funds that are easily taxed at 1.7% on income (can take money out after 2 accounting years). quite handy to build family/long term wealth

That's how taxes work generally though. I already paid income taxes on my salary, but when I spend it on something I have to pay taxes again, and then the retailer has to count it as taxable income as well. Anytime money changes hands the government gets its vig. I don't see how the corporate tax is so egregiously different.

> Anytime money changes hands the government gets its vig.

And doesn't that create an artificial pressure for money to change hands fewer times (for example, in the production of a consumer good)?

No, if we are talking about VAT then companies have to make the following sum

  €800 VAT the company charged to clients
  €500 VAT the company paid to suppliers 
  ===== -
  €300 VAT the company has to pay to authorities

This system makes sure that VAT over any good will only be charged once. VAT usually rolls over from one company to the next till it reaches its destination, the consumer.

ULTIMATELY, the consumer pays the VAT. The consumer cannot deduct VAT.

I doubt anyone makes this mental calculation when they’re considering buying something at a store.

Sure, big ticket items people might shop around for a lower tax but will they not buy something based on minimizing the amount they pay to the government?

No one is saying it's egregiously different. The question was why corporate taxes are lower than personal income taxes, the answer is that there is no logical reason why they should be equal or higher. No one complains that their sales tax rate is lower than their income tax rate.

Double the tax for double the legally distinct entities.

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