Company income is taxed three times: first when the corporation earns profits; second when the bondholders pay tax on interest income; and third when individuals pay tax on company dividends.

Question

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Company income is taxed twice: first at the corporate level when the corporation earns profits, and second at the individual level when dividends are distributed to shareholders. Interest income paid to bondholders is a separate transaction and represents a cost to the corporation, reducing its taxable income.

Company Income Is Taxed Three Times: First When the Corporation