Corporations have significantly fueled both the American and global economies. A corporation is legally defined as an entity allowing a group of individuals to operate as a single unit. In recent decades, the understanding of ‘corporation’ has evolved to encompass both for-profit and non-profit businesses, categorized by their tax structures. Corporations face a distinct tax system, differing from standard businesses.
Based on taxation, corporations are primarily classified into two types: C-corporations and S-corporations.
C-corporations are subject to income taxes and cannot deduct dividends paid to stockholders. This category includes publicly traded companies on the stock market and represents a significant portion of the corporate landscape today. S-corporations, typically small businesses and sole proprietorships, do not pay corporate taxes. Instead, profits and losses are directly passed on to individual stockholders, who then adjust their personal income taxes accordingly.
Public corporations are widely prevalent, owned by stockholders who purchase publicly traded stocks. These owners receive reports from the corporation’s management. Decisions are guided by the Board of Directors, elected by stockholders based on their qualifications and expertise in fields like business, politics, or academia. The Board then appoints a Chairman as the highest governing figure.
The corporate management system includes key figures who manage daily operations. At the top are the CEO (Chief Executive Officer), responsible for overall business operations; the CFO (Chief Financial Officer), managing finances; and the COO (Chief Operating Officer), overseeing sales, production, and personnel. The CEO may also hold the title of president, while the COO and CFO often serve as vice-presidents.
Beyond definition and structure, understanding corporate welfare is crucial. Corporate welfare refers to special treatment and tax breaks afforded to corporations. This can manifest in various forms, such as establishing offshore offices in countries with lenient tax laws, creating offices or factories in multiple locations to instigate bidding wars for tax incentives, or receiving government bailouts during bankruptcy or financial distress.
However, corporate welfare, funded at the expense of local citizens and small businesses, remains a primary concern for the American government. Despite efforts to address it, some corrupt politicians enable corporate welfare to persist covertly.