They would just game the ‘reasonable time’ taken to get profitable. And what bureaucrat is competent to tell you what is a reasonable time?
Do it like we do it now, with tax-loss carry forwards.
Taxing the top line is a terrible idea. Think of grocery stores with a large gross but only making a few cents on the dollar, which is a typical margin for them. They’d be paying a higher effective rate on profits than, say, General Dynamics.
First of all, the tax rate on top line would be miniscule. Current corporate tax rate is what 35%? Tax rate on gross sales would be about 1/10th of that.
Your point about difference between grocery store and General Dynamics is quite valid. However my grocery store, Winco, has 10% cheaper prices on most items compared to Safeway. Which means profit margins are not that small even on grocery items. Safeway is unionized and Winco is employee owned.