The logic is that the corporation is a separate legal entity from the owners. Under current law if they don’t pay dividends and there is no corporate tax, the corporate income will never be taxed.
Economically the simplest and probably best course would be to treat all corporations as subchapter-S for tax puposes, and pass through all corporate earnings for shareholders to pay income tax on at individual rates, and make all corporate dividends tax free. The government might gain a large amount of tax revenue, because they wouldn’t have to wait until you sell a stock or get a dividend to tax you on the profits of the corpations you own part of.
Corporate income is taxed in the year it is realised. Dividends are issued AFTER taxes. The investor gets to pay yet another tax on these. At least that’s the way it’s done in Canada with the exception of capital dividends.