Why 'double taxation' of corporates is justified

Irrespective of the country, one common complaint from business chambers is the seeming double taxation of legal entities-initially on the income they earn, and then on the dividends distributed to their shareholders. The argument used is that substantially, these entities should be viewed as pass through vehicles, and so their shareholders should be taxed on their share of the income from the entity, similar to how partnership firms are taxed.  For good reasons, the tax authorities do not yield to this argument. And the reason boils down to(in my view) externalization of social costs.

Except a partnership firm/individual entity/LLP, all other business forms ringfence the other assets of their investors. In case of insolvency/lawsuits etc, if the business cannot pay its liabilities, shareholders will not be called upon to pay its dues(unless of course they have personally guaranteed the obligations or unless law casts obligations on them like in India where private company directors are liable for unpaid tax dues under certain circumstances). If an entity desires a legal form allowing ring fencing, it should pay its social dues for this service('taxation'). We could of course have an explicit bankruptcy levy on all companies to pay this cost, in lieu of tax. But something tells me that would not go down well either. So we are stuck with this system, which is equitable albeit seemingly logically unsound.