[rayiner]

I'll address this point since it hasn't been:

> What we have now is overly complex (deducting losses from previous years) and amounts to a subsidy for losing money.

Say company A makes $10m in year 1, loses $10m in year 2, and makes $20m in year 3. Net gain in wealth = $20m. Say company 2 makes $10m in years 1 and 2, and breaks even in year 3. Also has a net gain of $20m.

Say the tax rate is 20%. In any sane tax system, both companies will pay $4m in taxes over three years. So how do you handle the loss for company 1? Does the IRS write them a check in year 2 for $2m? If not, company A pays $6m in taxes over three years, versus $4m for company B.

Loss carry-forwards are not a "subsidy for losing money." They're a mechanism for getting the right answer integrating a continuous function at discrete intervals, without allowing for negative tax due. Your solution to the complexity is to just punt and give the wrong answer.