Final answer:
Double taxation is when corporations pay taxes on their profits and shareholders pay taxes on the dividends they receive. The exact tax rates on corporate income and dividends vary by jurisdiction. Corporations face various other taxes as well, but these are not typically referred to as corporate taxes.
Step-by-step explanation:
In the context of corporate taxation, the term double taxation refers to the scenario where corporations are taxed on their income, and then shareholders are also taxed on the dividends they receive from those corporations. While the exact percentage of tax levied on corporate income and dividends can vary by country and even by the state within countries, it is widely acknowledged that this leads to a layering of taxes.
Corporations must pay income taxes on their profits, which is a direct tax on their earnings. These corporate income taxes are substantial because a corporation is recognized as a separate legal entity. On the other hand, when corporations distribute their profits to shareholders in the form of dividends, those shareholders then pay taxes on the income they receive, hence the term double taxation.
While corporate income tax rates and dividend tax rates can fluctuate, they tend to be substantial financial considerations for corporations and their shareholders. It is important to note that in addition to corporate income tax, corporations may be subject to other forms of taxes like property tax, payroll tax, and excise tax, among others.