Greg Mankiw explains why.
This is of course the real point that underlies my problems with Richard Murphy\’s view of corporate taxation. He refuses to accept even the concept of tax incidence.
It is myth that works on the blackborad (sic) and not in practice.
And his buddy, the "economist" at Tax Justice:
The idea that the tax incidence might be shifted, in some circumstances, from shareholders to workers or consumers, is based on very specific assumptions relating to the nature of the economy in question (i.e. it is a closed economy),
Umm, from Greg Mankiw:
Mr. Randolph’s analysis stresses the role of international capital mobility.
Far from it depending upon a closed economy, the analysis depends upon it being an open one for capital.
The ultimate payers of the corporate tax are those individuals who have some stake in the company on which the tax is levied. If you own corporate equities, if you work for a corporation or if you buy goods and services from a corporation, you pay part of the corporate income tax. The corporate tax leads to lower returns on capital, lower wages or higher prices — and, most likely, a combination of all three.
We shouldn\’t be taxing corporate profits at all, which is what makes his points about the details of how we do so irrelevant.