No, the capital gains tax is not “taxing the same income twice"

[Swede Atlanta]

26. I think you left out a critical part of their analysis as follows

1. You invest $65,000 in a business
2. The business is able to quadruple that $65,000 into $260,000 of profit
3. The business pays 25% of that $260,000 in corporate tax ($65,000) because of tax deductions, et.
4. The business pays out the remaining $195,000 to you as the sole shareholder
5. You pay capital gains tax on the $195,000

The argument is the corporation has already paid a 25% tax on the earnings/profit. So when they distribute some or all of the profit to an investor and the investor pays capital gains this is a double tax on the same earnings.

That would hold water IF corporations actually paid taxes. We know that several of the most profitable American businesses don't pay nor will they ever pay any corporate taxes due to corporate welfare written into the tax code, generous tax deductions and the ability to shield income through shell corporations.

If it was true the company had paid tax on the initial $260K of profit or gain then this would be double taxation. I'm not, per se, opposed to double taxation when it recognizes that the corporation made profit they could invest in their business. They chose to distribute the profits out.