| It's not just|
a good idea
Corporate personhood is a form of legal bullshit whereby an entity (whether for-profit, non-profit, private, or public) is declared a person. The corporation is thus legally separate from its owners for purposes of liability and taxation. Its owners are not personally liable for any corporate debts, so personal assets cannot be collected, as in bankruptcy or lawsuits. Corporations were then called "artificial persons."
Most well known is the for-profit corporation. Originally all corporations had to be granted special charters from the government and were only given these for express purposes (such as to build a bridge, dam, or other vital public works). Limited liablity was a privilege in these cases. The British East India Company was the first multi-national corporation, arguably, granted corporate status by Queen Elizabeth I, and served as a quasi-governmental body for over 300 years, even ruling India for half a century. The Great Mutiny occurred in this era, c. 1857, instigated by a rumor that the cartridge papers of bullets used by sepoys (Indian soldiers in British service), which had to be torn open with the teeth, were greased with the fat of pigs (offensive to Muslims forbidden to eat pork) and cows (offensive to Hindus forbidden to eat beef), feeling it was tantamount to consuming the animals' flesh in this manner. Both major faiths of the sepoys having been offended, they revolted, killing their British superiors and declaring a new Mughal Empire. The revolt was put down, but the severe mismanagement of India by the Company prompted London to institute direct rule. Many British Members of Parliament were stockholders in the Company, and outrage over its abuses was part of the impetus for the American Revolution-in the Boston Tea Party, Patriots dressed as Native Americans boarded an East India Company ship and dumped their cargo of tea into the Bay.
 U.S. case law
In the US, common law was followed and corporations granted charters for special projects which could be (and were) revoked if malfeasance occurred. Today such a revocation is extremely rare. As the US grew and expanded, corporations did as well. Since the stockholders were not liable for debts or wrongdoings of the corporation, they were able to accumulate much greater wealth, building up industry (with protection by tariffs and state subsidies, we must add). Next came railroads, build to claim the new territories conquered and connect the vast stretches of land as they were settled.
In 1886, the case of Santa Clara County v. Southern Pacific Railroad, 118 U.S. 394, was decided by the US Supreme Court. Though it dealt with the constitutionality of a tax by Santa Clara County on the Southern Pacific Railroad running in California, the ruling in favor of the Southern Pacific was used to grant corporations the rights of persons guaranteed under the 14th Amendment to the US Constitution. However, the ruling did not even address corporate personhood, only whether the tax was constitutional or not-which it held invalid. A headnote was put in the case by the court reporter that stated corporations were held to be people under the ruling. The court reporter was a former railroad lawyer and supporter of the idea. Headnotes do not have precedent value, however, but only the case holding itself. Despite this, it was assumed to be the holding and was used since then to grant corporations unprecedented rights, leading us to where we are today, with corporate dominance over much of life in the US-huge power, but very little accountability.
In 2010, the United States Supreme Court voted 5-4 to ban the government from limiting political donations from corporations, citing the free speech principle of the First Amendment and overruling two precedents on the issue.The decision was often parodied as "corporations are people", but the legal reasoning was that, because a corporation is made of natural persons who have First Amendment rights, the legal person (the corporation) can derive First Amendment rights.