Double Taxation

The article reads, "You can avoid double-taxation by investing your money directly into stocks or bonds (or something else that pays you directly without going through a "corporate middleman".)" If you buy a stock, it pays dividends in double taxation occurs. Can you better explain how avoiding double-taxation works?


  • Double taxation refers to the fact that the investment income of the company is taxed, and then, the dividends from your shares in the company are also taxed. By investing directly, you avoid the first level of taxation.

  • The Final(ish) Premium Margin Formula has the following: (1 + y)-(1/2).... I believe the exponent should be raised to the positive 1/2... not negative.

  • The source text does show an exponent of +1/2 but that term is in the denominator. In the wiki, I placed that term in the numerator so that's why I had to use -1/2.

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