Why do we tax corporations? Common answers focus on corporate wealth, infrastructure use, and market power. But these explanations may not capture the full picture. This article examines both the weak and strong justifications for corporate taxation, exploring what corporate taxes actually accomplish in the broader tax system.

Do large companies actually pay corporate taxes? Using data from over 18,000 firms across 27 countries, this analysis examines effective tax rates—what companies actually pay relative to their profits. The findings reveal a more complex picture than political rhetoric suggests, with significant variation across countries and important exceptions to common assumptions.

Are dividend recipients lightly taxed? A common claim suggests wealthy investors pay lower tax rates than wage earners. But this comparison typically overlooks a key feature of the tax system: corporate profits are taxed twice—first at the corporate level, then again when distributed as dividends. This analysis examines the combined tax burden and compares it across countries.