Okay, let's distinguish between "sole owner" and "person who is the entire business". Mitt Romney was the sole owner of Bain, and also drew a salary from the company, so presumably he was the one raking in the dividends if any were paid. But the company itself had a board of directors, multiple employees, etc. In that instance, yeah, the company should pay taxes and then when it turns over money to Mitt, Mitt should pay taxes on what gets turned over to him, because the board has nominal control over his salary. If he weren't effectively a separate entity from the company, he wouldn't need to be paid a salary by the company or receive benefits from it.
My brother in law, on the other hand is a person who is the entire business. He is a cabinetmaker, and he works on commissions. His income is always controlled by him, the way an artist or actors income is always controlled by that artist or actor. He alone decides whether to blow the entire income from a commission on popcorn, or put it in the bank for his retirement, etc. There's no illusion of paying himself a salary from the business, and there are no other people (except my sister) to consult. Even if it were a family business, where a single household is receiving the income, the control of the money is never transferred.
There also isn't any element of gambling. When you buy stock in a company, you're making a bet that that company won't go under. (Well, unless you're someone who is going to write the contract so you get paid whether it fails or not. Leveraged buyouts are bad because they don't prioritize the oldest debts for payment first if the company goes bankrupt -- including promised pensions!) Dividends are payments on a bet you've won -- and like lottery payments, they should be taxed.
And yes, if your stocks lose value you can take a "loss" on your income tax, so the reverse is true AFAIK. And if investors had to pay taxes on trades every time they traded stock there wouldn't be as much of the micro/flash trading going on. They have to pay a little on the UK stock exchange, I believe, but not on the NYSE.
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My brother in law, on the other hand is a person who is the entire business. He is a cabinetmaker, and he works on commissions. His income is always controlled by him, the way an artist or actors income is always controlled by that artist or actor. He alone decides whether to blow the entire income from a commission on popcorn, or put it in the bank for his retirement, etc. There's no illusion of paying himself a salary from the business, and there are no other people (except my sister) to consult. Even if it were a family business, where a single household is receiving the income, the control of the money is never transferred.
There also isn't any element of gambling. When you buy stock in a company, you're making a bet that that company won't go under. (Well, unless you're someone who is going to write the contract so you get paid whether it fails or not. Leveraged buyouts are bad because they don't prioritize the oldest debts for payment first if the company goes bankrupt -- including promised pensions!) Dividends are payments on a bet you've won -- and like lottery payments, they should be taxed.
And yes, if your stocks lose value you can take a "loss" on your income tax, so the reverse is true AFAIK. And if investors had to pay taxes on trades every time they traded stock there wouldn't be as much of the micro/flash trading going on. They have to pay a little on the UK stock exchange, I believe, but not on the NYSE.