Jonathan Berk, a professor at Stanford Business School, details one of the perverse consequences of our corporate income tax:

The corporate tax is extracted from persons associated with a business: investors, employees and customers. Government revenue from these people has been dropping steadily since the peak of almost 30 percent in the 1950s.
One reason why the corporate contribution is low is the tax break for debt. Companies’ payments to debt holders are deductible, while dividends for equity holders aren’t. This imbalance was written into law a century ago, when corporate-tax rates were so low that the disparity didn’t seem to matter. As those levies have climbed, corporations have become eager to take on leverage and thus lower their payments to the Internal Revenue Service.
We witnessed the consequences of this policy in 2008. Corporations, especially banks, opted to issue too much debt, ultimately imposing huge costs on society. One might argue that the leverage subsidy could be better eliminated by simply removing the exemption for debt payments. But that solution is unlikely to succeed, given corporations’ immense lobbying power in Washington.

Interestingly, Berk’s preferred alternative to the corporate income tax is higher taxes on investment income:

The obvious alternative would be additional taxes on investment income. Dividends could be taxed at regular rates for individuals, rather than the current 15 percent, which is low by historical standards. The capital-gains rate could be increased, too, from its current maximum of 15 percent on long- term profits.
Greater reliance on investor taxes would be simpler, more equitable, more efficient and more easily enforced. These changes could be implemented without adding to the true load that investors already shoulder. If investors are currently paying most of the corporate tax anyway, increased investment taxes merely offset what was previously paid as corporate taxes.

This sounds like an attractive solution, but I’d be eager to hear counterarguments.