If Joe buys something that costs $10 and has a 10% sales tax on top of that, then he has to turn around and sell it for at least $11 when Jane buys it. Jane in turn pays $12.1, the $11 plus the $1.1 in tax she owes. Thus when I want to buy it I'm looking at $13.31 minimum. And that is before anybody makes any money. But more importantly, notice that I in effect paid $3.31 in tax even though the tax rate is 10%. That was what I was saying about sales tax adding up across transactions.

What you are talking about with profits is income tax. Income tax is less vulnerable to the problem above but it has a whole different set of problems that don't hit other forms. The problem with income tax is that people and corporations can do things that reduce or shift the apparent profit around buy manipulating the companies books. Companies often buy other companies simply because the second company has a big tax loss that the first company can use to offset it's profits.

All tax is taking money from somebody to pay for government. Every form has consequences for the economy, and effects people to a different degree.

Jay