This is one of those places where a sensible theory leads to a bunch of loopholes in practice. If we applied a 20% income tax to corporate entities, then buyin

This is one of those places where a sensible theory leads to a bunch of loopholes in practice. If we applied a 20% income tax to corporate entities, then buying a car through a dealership would cost 20% more than buying direct from the factory. You can imagine what that would do to intermediary-heavy transactions, like when I give pension money to a fund marketplace who buy a fund who go to a stockbroker and buy shares; I'd end up paying 20% tax four times in a row. Of course the problem with letting companies deduct expenses is they can deduct sham expenses to move expenses between tax regimes. Sell your brand name to a company in a tax haven, pay a per-product 'license fee' for the right to use the name, and suddenly you're making zero profit in the place you do all your operations, as all the profit is, on paper, being made in the tax haven.