in the case of dividends, you are correct, you have to pay corp tax on your cash before you can hand it out as dividends (then the shareholders have to pay capital gains tax on it.) however, if the company immediately re-invests its cash, they don't have to pay corp. taxes on it. In theory, you could build a service-based business (where I am, that means no sales tax) that say, grew for a year on it's own revenue but paid no corp tax (in California and many other places there is a minimum tax, but that's small enough to ignore for this) then, at the end of the year, you could flip the company to some investors, and all your profits would be taxed only once, and at the lower capital gains rate.