Dear pigdog,
* chuckle *
First, you're only showing a 25% tax rate in your latest table. LOL.
In Level 1, there is a total of 44 cents profit (the sale price is $1.44, the input is $1, that leaves 44 cents for total pre-tax profit), and you're paying 11 cents. That's 25% of the pre-tax profit (it's an inclusive rate when talking about income taxes).
In Level 2, you have 64 cents of pre-tax profit, and 16 cents of tax, for a rate of 25%.
And so forth (although your final levels come to about 25.5%).
Anyway, your corporate income taxes as a percentage of revenues come out to around 11%. That's unusually high for any corporation.
Tell ya what. I'll make a deal with you.
You find 20 Fortune 500 companies that pay 11% of their revenues in federal corporate income taxes (remember to try to estimate their state corporate income taxes).
I'll find 20 Fortune 500 companies that pay less than half that amount - 5% or less of their revenues in federal corporate income taxes.
I don't know if 20 Fortune 500 companies exist that pay 11% of their revenues in federal corporate income taxes, but if you find 20, we'll each go for another 20. And we'll see who runs out first.
If you think that your spreadsheet represents typical companies, you should be able to back it up pretty easily, wouldn't you say?
I'll even give you a head start, pigdog. I spend a lot of time going over income statements of publicly-held companies, and thus, I'm aware of at least one company that pays approximately 11% of its revenues in federal corporate income taxes. It's a good one, too. It's Microsoft.
Now you only need 19 more.
LOL.
sitetest
As I've told you before, percentage of revenue is meaningless when it comes to embedded taxes. Your continued attempts to use it to come up with a lowered number is pathetic.
Why don't you find the preponderance of major industries that pay a tax rate of less than, say, 30% on their profits.
As for the cascading tax example, the meaning is clear enough in that the developer intended the term "profit margin" to be the desired profit margin of that level. On L1, then the tax amount that is embedded is $0.33 x 0.34 = $0.11. The input plus the two other figures then total up to the selling price. Calculating the pre-tax profit as a % of the selling price is meaningless since the tax to be paid is the $0.11 calculated in the example and not figured on a percent of the selling price - that's merely your attempt to use the meaningless "revenue" as a base for taxation. The correct figure to use is the amount subject to tax ("profit margin" in the example) times tax rate ("tax rate" in the example). Taxes are calculated and paid with that calculation as a base ... check with the IRS if you can't figure that out.
Your similar attempt to redefine the calculation in L2 is also incorrect for the same reason plus your error in trying to add the profit from L1. The profit in L2 is, as stated, $0.48 (not $0.64) and the tax rate is 34.4% as stated which gives a tax due of $0.16.
Your attempt to redefine the example isn't going to work - mainly because it is not related to how taxes are derived. You'd no doubt LIKE to show taxes as a % of revenue, but that ain't the way it's done so stop the idiocy. You're fooling no one (except yourself - if you genuinely believe that).
You also missed (or don't understand /or don't wish to understand) that the example was never presented as representing a real world business but is a simple example of how the tax cascading mechanism works. So you can look at "income statements" until uou're blue in the face. Unless you learn how taxes are calculated, you'll always be looking at the wrong numbers as you are now.
Hint: Look on the P&L for something like "income subject to taxation" and " income tax paid" and divide the latter by the former. That'll give you a tax rate for most major industries of something like 34.4% for the 2001 IRS SOI.
And that's the tax rate used in the example in #399.
It's really unbelievable that you don't know how taxes are derived.