It is not a lie. What has happened though is the majority of investors/stockholders are so far removed from the corporations they are invested in that it has lost its meaning. And, to understand it you have to have a basic understanding of business and taxation.
A small business which is a corporation is taxed and treated the same as a big corporation ( assuming they don't make an S election - whole other topic) So, Tom the Bricklayer has a business. He incorporates for liability protection. It is Tom, and two helpers. After Tom takes a salary, and the three helpers get paid, all the other bills are paid the company has $50 in net income. The company pays income tax on that money. But, Tom wants to take some of that money out - so then he does as a dividend which is then taxed again as his personal income.
The reason it is referred to as double taxation is if Tom was not incorporated and was a sole proprietor, he would pay income tax personally on all $50 of that money. If he left it in his business - or took it out for personal use, he would only pay the income tax on the $50. He wouldn't pay income tax on the $50 PLUS paying income tax on the dividends.
So, then what happened.... Congress and the IRS realized that there were a LOT of sole proprietors running around. They didn't want to pay tax on money they earned with their own hands, twice - so they weren't incorporating. That was a problem for the IRS because it is much easier as a sole proprietor to hide money and under report income. At the same time, people were not starting new businesses - which small business is the base for our economy, because they didn't want to deal with double taxation. So, to spur economic growth and to encourage people to incorporate and essentially put some structure in their business - which is easier for auditing, they created what is refered to as an S corporation. In an S corporation, the owners of a business file a tax return for the business - but their share of their earnings are reported on their personal income tax returns. So, the corporation does not pay a tax on the money, the shareholders pay the taxes directly so the net income is only taxed once.
But, now we have people who are receiving dividends from businesses they did not grow or work in with on their own. Essentially, it is not that they are being taxed on their own hard work - as was the motivation to create the S. They are just getting the benefit of what the corporation makes. And, so now, when we look a the double taxation affect, it doesn't mean anything - outside of the small business arena - because, I agree, Mitt's money is not double taxed in the same sense it would be if it was essentially his hard work and earnings that created the net income which was taxed, then when he takes his earnings - they are taxed again.
The problem is the tax code is not just for the Duponts of the world. The same tax code, the same rules apply to the mom and pop store on the corner. So, when we have these discussions we have got to look at the WHOLE picture. How do we make sure the Mitts of the world aren't benefiting from a benefit in the tax code, which may have been designed more to benefit and encourage the hands on business owner, than the investor of today - without hurting those people who aren't rich, who are using businesses they run directly to make a living. So, its never as simple as - well this double taxation thing is just a bunch of hoooey. It really isn't to many people that I work with every day.
( And before someone pipes up with something brilliant about how they should just take all their money in the corporation down to 0 and have no net income and how if you don't know how to do that - you must not be a very good accountant - please consider that you have to leave money in your business to grow. So you have to have some earnings that are left, and subsequently taxed so that you can build equity in your business which affect the types of jobs you can get, your borrowing capacity, etc)