You are a shareholder in a C corporation The corporation earns 2 per share before taxes?

As a shareholder in a C corporation that earns $2 per share before taxes, your potential earnings are subject to corporate tax rates before any dividends are distributed. After taxes, the corporation will have a reduced amount to either reinvest in the business or distribute as dividends to shareholders. Depending on the company's dividend policy, you may receive a portion of the after-tax earnings as dividends, which may also be taxed again at the individual level. This double taxation on corporate earnings is a key characteristic of C corporations.