[jf-]

Because the tax system isn’t designed to be based solely around income tax. In order to make up the missing funds where corporation tax ought to be, personal taxation would have to be considerably higher, which would also mean that employee wages would have to be higher to compensate. The overall perctange of revenue paid into the tax system by the corporation would be the same via higher employee wages.

However, we do not live in a personal taxation only system. Corporations are therefore able to radically reduce their tax spend by avoiding corporation tax and not increasing spend on wages. The total amount of tax paid by the corporation goes down. This is obviously true, otherwise there would exist no motive for companies to pursue strategies of paying such low corporation tax.

[hathathat]

If the CEO wants to buy a new Ferrari, they need to take money out of the company - either as income or dividends (both of which are taxed). If the company buys him his car then it's a taxable benefit too. If the company increases the value of the CEOs shares by doing share buybacks, then the CEO just pays more capital gains taxes. Avoiding corporation tax means the tax paid directly by the company goes down, but it's not at all obvious that the net amount the government receives goes down. Only direct taxes are reflected on their balance sheet, though, which is a good enough incentive.