Most people don't realize that the founding fathers of this country HATED corporations. Their fight was not just against Britain, but against the East India Company, the corporation that ran the economies of most of the British colonies. They knew that corporations were the bane of a free existence, so they destroyed every corporation in the nascent American states.
While I documented how the corporation affected the theology of American politics, it wasn't clear to me why the corporation should exist at all. What possible advantage would a government derive from allowing corporations to form, especially given the fact that these same corporations always tended to rival national governments in power?
The brilliant economist Walter Williams explains that in his March 18, 2009 column:
If a tax is levied on a corporation, and if it is to survive, it must raise the price of its product, or lower dividends or lay off workers. In each case, it is people, not some legal fiction called a corporation, who bear the burden of any tax levied on the corporation. An important subject area in economics called tax incidence says that the entity upon whom a tax is levied does not necessarily bear the burden of the tax. Some of the tax burden can be shifted to another party. That's precisely what corporations do and as such they are merely government tax collectors.(emphasis added - Read it all.).
Governments want corporations because, prior to the advent of the IRS, corporations were the prime means by which governments collected taxes. Even after the IRS and/or similar government entities are created, corporations serve as mini-Me versions of the IRS. Whatever tax is levied on a corporation will be passed on to the populace.
The funny thing is, I recognized this relationship when I was roughly 14 years old. I never saw the point of raising taxes on business, since I knew I would be paying the tax in the form of increased product prices. But I never made the final connection: corporations are just additional taxing agencies, additional internal revenue services for the government. They provide the fine-grained control over collection which permits the IRS to run without needing to audit more than one or two percent of the population.
Every corporation from which I make a purchase is an extension of the IRS into my life. Seen in this light, in a country where sales tax is applied, every bit of advertising is really a come-on to allow the government to eat another portion of my revenue, with the corporation as the government agent splitting the swag. I never thought of it this way until now.