zbird2134

charly, while I have no idea what you’re referencing, I think I can guess the source of the confusion. Obviously if NI gets smaller so will NI/EBT (negatively affecting the ROE from an extended DuPont). NI/EBT is the ratio of post-tax income to pre-tax income - it is somewhat oddly referred to as the tax burden. This is counter-intuitive, since the “burden” in ordinary language would be the ratio of tax to EBT (or (NI-EBT)/EBT). Just guessing, but could this be the problem - that a smaller “tax burden” actually means more tax to pay proportionally?
In the DuPont equation, if you’re salvaging less return, due to a smaller “tax burden”(!), your ROE will decline accordingly.