The U.S. corporate income tax - and in particular the double taxation of corporate income - has long been one of the most criticized and stubbornly persistent aspects of the federal revenue system. Unlike in most other industrialized countries, corporate income is taxed twice, first at the entity level and again at the shareholder level when distributed as a dividend. The conventional wisdom has been that this double taxation was part of the system's original design over a century ago and has survived despite withering opposition from business interests. In both cases, history tells another...

The UK and the USA have historically represented opposite ends of the spectrum in their approaches to taxing corporate income. Under the British approach, corporate and shareholder income taxes have been integrated under an imputation system, with tax paid at the corporate level imputed to shareholders through a full or partial credit against dividends received. Under the American approach, by contrast, corporate and shareholder income taxes have remained separate under what is called a 'classical' system in which shareholders receive little or no relief from a second layer of taxes on...