The corporate tax is a terrible disincentive to make money. Wealthy entities that make money are more concerned with relative status than absolute status.
On the other hand, the corporate tax is a great way to ensure corporations retain profits instead of paying them out, thereby making the corporations larger.
This would all be obvious if people remembered rule 1 of economics, which is that actors respond to incentives.
"On the other hand, the corporate tax is a great way to ensure corporations retain profits instead of paying them out, thereby making the corporations larger."
Corporations pay taxes on the money they retain, and not on the money they pay out in wages or other costs of doing business.
Of course, they also do pay taxes on money they pay out to shareholders, and they don't pay taxes on money overseas affiliates retain...
But "corporate taxes are an incentive to retain capital in the corporation" is generally incorrect.
There are plenty of ways to make money without incorporating.
I'd much rather eliminate the personal income tax and shift to user fees, and a flat corporate rate (a user fee for limited liability, if you will) and equal flat tarrif. But that's not popular for some reason.
Flat fees/taxes are unpopular because people tend to believe that the capitalist system is inherently unfair. For instance, a rich person who gets $100 can invest all of it, while a poor person must spend it on necessities. (And there are deep psychological drives and practical reasons that also cause most people to spend more irrationally when theyre poor as well)
Theres also Pikettys argent that return on capital grows faster than the economy.
But there are counter-arguments, and its always good to consider and experiment with new ideas, so believe what you will. But I think people have a prettty good reason for liking a progressive tax, even rich people like this.
Personally I think the economy has deep flaws. Like private ownership of natural and limited resources being a thing (which i believe will cause wealth to consentrate in a counter-meritocratic way) and the transfer of money not accurately reflecting the value of intellectual "property" (transfer of money of physical goods, which money is supposed to model, is zero-sum. sharing intellectual products is not). So I welcome new thoughts. But I dont think anyone has the right solutions yet, and flat fees/tax isnt exactly a new idea.
On the other hand, the corporate tax is a great way to ensure corporations retain profits instead of paying them out, thereby making the corporations larger.
This would all be obvious if people remembered rule 1 of economics, which is that actors respond to incentives.