One thing I rarely see discussed anywhere is that a corporate tax is essentially a subsidy to existing companies and is anti-capitalistic.
The reason is that an existing corporation turning a profit can tax-free reinvest their profits in, for example, product development to improve their market positioning and profits in the future.
If they were to book that profit and pay it out as a dividend to their owners, who would then invest it into other companies, the money would get taxed twice before ending up in the investment target. The first time as a corporate tax and the second in the form of a capital gains tax on the owners.
Intuitively, it seems like this could have a significant effect on markets and might be one of the reasons we see so many markets dominated by big companies, even in non winner-take-all markets.
The reason is that an existing corporation turning a profit can tax-free reinvest their profits in, for example, product development to improve their market positioning and profits in the future.
If they were to book that profit and pay it out as a dividend to their owners, who would then invest it into other companies, the money would get taxed twice before ending up in the investment target. The first time as a corporate tax and the second in the form of a capital gains tax on the owners.
Intuitively, it seems like this could have a significant effect on markets and might be one of the reasons we see so many markets dominated by big companies, even in non winner-take-all markets.