If you don't allow a company to carry forward loses you get a capricious result:
Company A makes $20M in 2019 and $20M in 2020 which is $4.2M dollars tax each year or $8.40M total tax on $40M total earnings.
Company B makes -$30M in 2019 and $70M in 2020 which is 0 year and $14.7M or $14.7M total tax on $40M total earnings.
Regardless, you can't tell based on the data given whether the companies re-invested the money or distributed to shareholders. The difference between those companies could just be whether they booked a $50M sale on Dec. 31 or Jan. 1. Or whether they wrote off a bad asset on Dec. 31 or Jan. 1.
It's totally capricious.
An investment in a new factory cannot be deducted as a business expense all at once; it must be depreciated over its useful life, so only a portion of it can be recorded as an operating expense against income for every year it is used.
For software companies it's fuzzy; if you have a team of developers constantly working on enhancements to the company's platform, should the staff wages be counted as expenses or capital investment? It comes down to accountancy technicalities:
https://www.wallstreetprep.com/knowledge/accounting-capitali...
Take a company that loses $100M one year because of a natural disaster (like a pandemic), just manages to stay afloat by taking out loans, then makes net income of $50M the following year.
The company has net-lost $50M over two years and incurred large debts, and now has a huge tax obligation on the $50M, before they can start paying their lenders back.
A company in that situation may be better off shutting down, leading to huge job losses for the employees and trading partners, and an overall loss of tax payments that the company could otherwise have generated long into the future.
Your line of argument seems to be that it's always important to get the most possible tax out of a company in any given year, no matter the overall net outcome for society over the long term.
The economy is more complex than "look, money, let's take it for government."
I guarantee all the people involved were taxed. I would rest a lot easier knowing that the organization that employs me didn't have to worry about taxes. Instead it has to employ an army of people just pay them. Double taxed, everyone is.
it's quite obvious that if you took all of the value of a company the company would cease to exist along with the benefit they bring to society. you don't want to take all of their value? you just want to take the "fair share"?
how do you know what the "fair share" is that doesn't harm the capacity of the company to continue to provide value? fairness would be they pay for the public goods and services they use. do they employ trucks to deliver their product? then they should pay gas taxes on their deliveries. but, wait, they already do that so we want something _more_ fair than being treated the same as everyone else.
that still leaves us with the unknown of "how much more_than_fair_taxes we should require of a company and be sure not hinder it's ability to provide value?"
> how do you know what the "fair share" is that doesn't harm the capacity of the company to continue to provide value?
I don't know, but it should pass a smell test at least. I can tell you that a company that was recently net negative only because of reinvestment using those negative years to not pay taxes during positive years doesn't pass the smell test.
It is a good question but a different point to the current discussion. Which is Tax Code.