Why Tax Corporations? Only real people can pay a tax, so why not just tax incomes of corporation owners via the personal income tax? Justification #1: Corporations are distinct entities and ownership and control are separated Justification #2 Corporations receive a number of special privileges, such as limited liability. Corporation tax simply a user fee Justification #3: Corporation tax protects the integrity of the personal income tax. Cannot simpl accumulate income within the corporation to defer tax payments3 Why Tax Corporations? • Only real people can pay a tax, so why not just tax incomes of corporation owners via the personal income tax? – Justification #1: Corporations are distinct entities, and ownership and control are separated – Justification #2: Corporations receive a number of special privileges, such as limited liability. Corporation tax simply a user fee. – Justification #3: Corporation tax protects the integrity of the personal income tax. Cannot simply accumulate income within the corporation to defer tax payments