Until now, we have ignored the effect of income taxes in our CVP Analysis In many companies, the income targets for managers in their Strategic plans are expressed in terms of Net income, That’s because top management wants subordinate managers to take into account the effects their decisions have on operating income after income taxes. Some decisions may not result in large operating incomes, but they may have favorable tax consequences, making them attractive on a net income basis – the measure that drives shareholders’ dividends and returns.