Pipeline Theory

Posted in Finance, Accounting and Economics Terms, Total Reads: 721
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Definition: Pipeline Theory

It’s a theory or belief that investors of companies/corporations which passes there capital gains, proceeds and dividends, should not be taxed at the corporate level.


This is because the corporate level tax is levied on corporations on capital supplied by investors. Moreover these investors are again taxed at the personal (individual) level on their dividends, proceeds and personal income. This results to double counting and taxation, which should not be the case. Hence investors should be only taxed once and not taxed at the corporate level. This belief is brought forward by the Pipeline Theory. It is also known as Conduit Theory.

 

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