It's up to the state what you charge at each percent. You don't need to give a discount for lower margins, you can't simply up the rate at higher margins i.e 1%

It's up to the state what you charge at each percent. You don't need to give a discount for lower margins, you can't simply up the rate at higher margins i.e 1% above current base for every 10% margin above 0. Also the point is to disincentivise gouging, Walmart doesn't need to be given a lower rate just because Microsoft is charged more. As to corporate mergers, if the state feels it is a tax dodge it can either veto the merger, or stipulate that each part be taxed as an independent entity. Not to mention that Microsoft would probably prefer to reduce it's margins by just charging less (slashing revenues by 20% should more than halve the tax burden and likely strengthen it's market hold) or pour profits into R&D than to merge with a less profitable company. And that's before you get into the mess that a giant tech/retail merger would entail.