15: Taxes on Profits
The author starts obliquely, reflecting on commodity taxes. Specifically, if a tax is placed on luxury items, it falls on only those who use them, and they can opt to use less - this decreases the pleasures of life, but is less harmful than taxing necessities. (EN: Not sure I agree, given the interconnectedness of things, as the manufacturer of a luxury good loses profit, his laborers lose wages, his suppliers lose profit, their workers lose wages, etc.)
Taxes on profit are considered to be different, as they are taken from the amount of revenue "left over" after expenses have been paid, and are perceived to be removed from the producer's extra income.
This immediately overlooks that the producer's "extra" income is likened to the wages of the worker - it is the income he uses to purchase his own necessities and the conveniences of life - and as such producers will treat such taxes as an expense, raising the price demanded to ensure the profit on sales meets their needs.
It also overlooks the impact on investors, who seek to maximize their return, and will seek to invest where the best profit is to be made. And where all industry is taxed, this evens matters out domestically, but makes all domestic investment in production less attractive than opportunities abroad.
Taxes on profit can also be consider the equivalent of taxes on money, decreasing the purchasing power of money, given that some portion of any money received in exchange for a good will be consumed by taxation, and the price is raised to recover the loss.
Such taxes will not necessarily be visited on all goods proportionately, though it may appear so in the aggregate. The fewer the number of units produced, the greater the increase will be on each unit. This seems a simple matter of division.
Ricardo also considers the effect of such a tax on the landlord or investor, and comes to the same conclusion: they are nor directly affected as manufacturers are, but are indirectly affected when they use their own income to buy manufactured products.
Ultimately, Ricardo states: "I do not see how it can be disputed that by taxing the profits of all manufacturers, the prices of all goods would rise."