This article aims to explain the phenomenon of tax brackets, for different parties to be taxed, without claiming to hold the absolute truth. It is an investigation to the likely reasoning behind such shenanigans.
There are two big differences between taxing private individuals and corporate entities:
Private people pay most taxes over their earning (wage tax), supplemented by taxes on savings; these vary based on personal wealth and how left the current political climate is. Both wealth- and wage tax have different levels, usually above and/or below a certain amount, a specified percentage is owed.
Corporate entities pay largely over their profit before tax, the composition of which varies per country that it is reported in. However, they can also face taxes over dividends and other means of distributing, or even holding, profit (small businesses can be exempt from this, and very large ones can force an exemption).
Why the difference in tax brackets
The main reason for this difference is likely a combination of divide and conquer (most people are employees, but only few are business owners). And the differing nature of both; wage tax is very predictable as it is mostly a percentage of a fixed pre-tax salary. Taxes paid by businesses will vary as they are based on many different factors, such as a varying revenue and countless deductibles.
The primary, fiscal, role of government is to create the infrastructure for growth, and the role of taxes is open to debate. Some say that it stiffens all growth as it reduces profit from entrepreneurship, other give examples of large profitable corporations that were started during high tax intervals. We like to think of it in the following manner: Taxes are supposed to be spent on buying security and infrastructure, that you know that business can be done in a safe manner. If taxes become exorbitant, companies lose faith that they are getting what they pay for and investigate the possibility to move their headquarters elsewhere. If people have the same idea, they generally vote for a different party that promises austerity or a more severe change. This difference in reaction is something that officials need to balance.
Politics
Some taxes, at least nowadays, are based on the need to pay for a bit of non-vital policy: A politician wants to do something, so more money is needed. Since politician refuse to pay for their own plans, taxes are raised. Now the main decision is to have people either pay for it directly or indirectly; if private parties are taxed, people will directly pay for the new project. Indirect means that companies are taxed, who then have to raise prices or take a loss on income (which reduces overall taxes on profit on the long run, that in turn could result in more private taxes to make up for the loss).
Should be noted that taxing company`s tends to be more favourable in times of election; people belief that it does not hurt them at all.
Need for stable sources of income
Some bigger/multilateral public spending can require a large constant source of cash influx. In this case a long term stable source of revenue must be found; what better than taxes, as the consequence of not paying is seizure of goods (so your assets are sold until the bill is settled anyhow) and jail time. For this expenditure the most stable source needs to be found, which tends to be taxes on income as everyone needs a form of it. However, the question remains how much should be taxed, a large blanket tax offends the higher up, so has little chance of surviving an election, where a minor increase in the tax bracket of low wages has a huge base to profit from. The latter also is less mobile; you can`t just buy a second house across the border when rent eats up half your income. As such, taxing lower wages is generally more attractive than anything else.
Presenting the bill to small- and medium sized businesses is also possible, but they move in tandem with local taxes as those directly affect how much people can spend. So one option does not obviously prevail over the other, it really is a matter preference and case studies.
