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.