Economic Question

Do taxes affect the overall profits of a corporation? For example, lets say a country has a high tax rate and it builds a new STATE corp. Will the profitability of that corp be affected by the country's high tax rate?

Taxes only affect private corps while profit sharing only affects state corps. Profit sharing won't affect the profitability either, it just determines how much of a corps profits is shared with the country.

Not so; state, private and public corporations all pay tax at the rate set by the host country.

so can tax affect profit?

no, it affects net profit, but the actual profit doesn't change. if a corp makes, say 1B a month, 75% tax will drop the net profit to 0.25B, and pay 0.75 to the country. the lower net profit, will mean a lower market value, and higher (worse) PE, but the actual profit of the corp will stay 1B.

so essentially, tax does not effect how much money the corp is bringing in, it only effects the value of the corp. and in the case of private and public corps, it effects who gets the profit, the country or the owning CEO/share holders.

okay thank you! very helpful information

An alternative to high corporate taxes (which can affect CEO corporations) is the usage of Profit Sharing. Profit sharing takes a portion of the profits of a state owned corporation and pays it to the country (corporation keeps the rest). So you can have a low tax rate (attracts CEO's) and still make a good profit from state owned corporations. Your profit sharing percentage shouldn't be too high either, because it could affect the value of the corporation and its ability to purchase upgrades(effectivity and quality).

im aware of the profit sharing and im trying to maximize budget surplus. ive noticed that a 75% profit sharing and a 7% tax rate is pretty efficient. Ive always tryed to keep corp tax below 10% since i also run an enterprise i know the burden of taxes lol. I'm curious to know everyone elses way of maximizing budget surplus.

Try adjusting your trade strategies (buying and selling) for your state corporations. By adjusting the numbers, you could potentially save some money when purchasing materials and make more money when selling the product.

interesting. i will give it a try