All taxes make the wallet of some live human being lighter. There is no exception to this rule. The study of whose, when, is that of tax incidence.
The incidence of corporation tax is split between the shareholders and all the workers in the economy where the tax applies. For if you tax the return to capital then you will have reduced the return to capital thereby reducing the amount of capital invested. Since it is capital added to labour which increases labour productivity this then reduces the growth of wages - average wages are determined by average labour productivity.
All of this is well known. Where disagreements come in is what is that split between capital and labour? It is absolutely not the corporation that pays - that might be a legal person but it’s not a live human being therefore it cannot carry the economic burden of the tax. Reasonable studies of the US state that it’s 70/30 capital to labour in that market. Other, equally reasonable, studies indicate 30/70. A study here argues 50/50 for the UK.
One study by Kimberly Clausing argues that it’s 0% the workers. Although when directly questioned when that came out (by this writer asking the question of her) Professor Clausing did agree that the result could be driven by multinational companies already using offshore to reduce their tax bills, severely limiting the relevance of the result.
We also know what drives the split. The smaller the economy in relation to the global one, the more mobile the capital under discussion, the more it will be the workers carrying the burden. It was also a result from Tony Atkinson and Joe Stiglitz that the burden could be more than 100%. That is, the workers could lose in wages more than the amount raised in tax - although we’d expect that result to apply in small and poor countries where the capital under discussion is foreign investment.
This loss from this form of taxation is known as the deadweight cost. What is lost purely from the amount of tax raised, the method of doing so. This is nothing at all to do with hte good that may be gained from the spending of the money, it’s purely a commentary on how the tax is raised, how much is, from whom.
We have a spectrum of rising deadweights too. From repeated taxation of real property (so, an LVT, the taxation of resource rents and so on) through consumption taxes (VAT say), to income taxes, to capital and corporation taxes. Topping out at vastly the most expensive in this sense are transactions taxes (the Robin Hood tax on financial markets say).
So, corporation tax is a bad tax because it has high deadweights - we lose more economic activity this way than by raising the same revenue from less damaging taxes. This birden also falls ever more heavily the smaller a place is, the poorer it is. In developing countries the damage is more than the revenue raised.
All of which is a prelude to this:
Liz Truss could pull the UK out of a deal agreed by Rishi Sunak to “stitch-up” global corporation tax rates at 15 per cent, it has emerged, as two of her most prominent supporters criticised the agreement.
That attempt at the minimum is an international cartel determined to enforce a bad tax. Of course we should pull out of it. Even if not for ourselves then for those in the developing countries where it bites hardest.
As to why the attempt at the cartel that’s because almost no one outside the actual experts in the field of taxation understands the first 8 paragraphs of this little note. Therefore politicians see it as a convenient way of taxing them over there, those corporations, to provide nice things for voters. Instead of what it is, a method of impoverishing those same voters.
Competition between nations to lower the corporation tax rate is exactly what stops that political pillaging. Which is why the politicians are so against that competition.