I don't see how limited liability is an argument for double taxation when 9/10 Western democracies have franking credit systems that eliminate the double taxation on corporate profits paid to owners (and I'm only addressing this from a startup owner perspective, since this is HN).

The simple fact is that the US has something like this already, with qualified dividends taxed at 15% to try to reduce the burden of double taxation. That's still not low enough.

The point is moot when you start talking about S Corps since those offer the same limited liability while passing through the tax burden onto the shareholders directly.

There are many different corporate structures, the sole proprietorship provides the limited liability without double taxation.

According to http://www.nytimes.com/allbusiness/AB4113314_primary.html (and just about every other source google points me to) , a sole proprietor has unlimited personal liability for the obligations of the business.

What's your source for saying that it provides limited liability?