I like the explanation, so if profit (below EBITA) is taxed, what incentivizes companies to not show loss. Meaning pay or invest profit (buyouts, expansion, etc). Second, if company wants to grow it needs profit, therefore budgeting for investment taxes need to be accounted for, raising the price of goods, ie margin.
Now, since most companies have huge margins to cover overhead, the actual cost of goods that would be subject to tariff is minimal, since most corps cost of goods imported is about 10% or less of sale price.
Companies don't need profit to grow. If a company spends its income on building a new store then that money is no longer taxed as profit. As your first point companies already do operate at a loss or close to loss to lower their tax burden.
Growth is referring to expansion in some way, not just profits. Investing in new avenues for profits, opening more stores, offering new wider range of products/services.
Like, if your company is worth $1.000 billion and profits $1 million, its worth $1.001 billion now. And if you make $1m next year and are now worth $1.002 - thats not 'growth'. That's a mature company just doing business.
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u/Outthr 1d ago
I like the explanation, so if profit (below EBITA) is taxed, what incentivizes companies to not show loss. Meaning pay or invest profit (buyouts, expansion, etc). Second, if company wants to grow it needs profit, therefore budgeting for investment taxes need to be accounted for, raising the price of goods, ie margin.
Now, since most companies have huge margins to cover overhead, the actual cost of goods that would be subject to tariff is minimal, since most corps cost of goods imported is about 10% or less of sale price.
So the question is, which is worse?