But high unit margins are terrible. First of all, they mean higher consumer prices, which are bad in and of themselves. But also, that unit margin either becomes corporate profit (in which case it makes richer the stockholders of the company, who will, ceteris paribus, be wealthier on average than the consumers paying that cost), or it gets eaten up by the management of the company (in which case it makes richer the executives of the company, who will, ceteris paribus, be wealthier on average than the consumers paying the cost).
It is crazy to suggest that we should pursue a policy that increases consumer prices and redistributes that wealth to the wealthy.
But the point is, you're weakening that. You're making market share less valuable, and unit margin more valuable. So you'll tip the scale more in the direction of high-margin, low-market-share organizations.
Gosh, this forcing fiscal motivators on people sure causes some tricky unintended consequences.
Well, then obviously these companies would not experience price competition from smaller companies when they pass the tax on to the consumer, right? I don't see how that's a problem. If there's a demand for the product, it will be built. It will just be cheapest to build it in the smallest company. Larger companies could still persist at it if their size confers cost savings over the cost of the tax. The point is, rather than having all the financial wizards trying to figure out how to hide money and feed monolithic behemoths, they instead will be working on how to carve themselves up into independent pieces that can be held accountable.