From Libertarian Michael A. LaFerrara:
Especially in high-tax states like New Jersey, people are up in arms about the proposal to end the deduction for state and local taxes, on the grounds that we shouldn’t be taxed twice on the same income. Though the issue of tax deductibility is more complicated than that, for the sake of this principle I’ll just say: Fair enough. But if that’s so, then we should eliminate the corporate income tax. The corporate tax is the poster child for double taxation.
A business corporation is not a person. It is an association of individuals who come together voluntarily for a productive mission. It is a legal and cultural framework for cooperation. It makes no more sense to tax a corporation than to tax a labor union or a chess club. The owners of the corporation are taxed at the individual level, to the extent they draw dividend income or earn capital gains or draw wages and salaries from the company. To tax a corporation is to tax the owners twice, which is no less bad than taxing individuals once at the state level and again at the federal: Both are double taxation. Morally, this is wrong.