If you are using "Override" feature, it will override the cost price, as you can see in the screenshots. The usage of "override" will eliminate the TAX and the other Discount rules, because it is "override".
If the TAX wasn't the case, then everything would be fine, there won't be any confusion.
So, what you need to do is;
1- Create a proper rule that works for you case to offer discount:
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2- Apply this rule to the product(s):
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Regards,
Support