Corp Profs At All Time High

September 4th, 2011 at 1:54 pm

On “This Week” this morning, I mentioned that cutting corporate taxes was unlikely to boost hiring because their after-tax profits are already at an all-time record high, going back the beginning of the data series in 1947.

Here’s the picture.  The top line is pretax, which is also historically high, but the record-breaking (by a long shot) bottom line reflects both higher profits and lower (effective) tax rates—i.e., we may have a high statutory corporate rate (35%) in international terms, but there are so many exemptions and loopholes that the average rate is much lower; see the table at the end of this doc showing how US firms went from paying a high share of GDP in corporate taxes in the 1960s to among the lowest today.

Source: BEA

Clearly, if corporations can achieve this level of profitability without much hiring, or for that matter, putting much of it into American paychecks (the compensation share of GDP is at a 55 year low), then why would even higher after-tax profits lead them to do so?

You really can’t say this enough: the R’s jobs plans to close the EPA and cut corporate taxes is not a jobs plan.  It’s their permanent agenda imposed on a plan with the word “jobs” prominently on display.

 

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4 comments in reply to "Corp Profs At All Time High"

  1. Robert says:

    Jared,

    It would be interesting to know what percentage of corporate profits since 2007 may be attributed to operating cost cutting (including labor), technology-enhanced productivity, and increased share of final sales. I suspect the largest portion of these profits is directly related to worker attrition due to involuntary layoffs.


  2. Comma1 says:

    Good job on This Week, although nobody on the set pointed out that closing the EPA is not a jobs plan. (As you do in this post). This was a missed opportunity. Furthermore, this should be repeated often.

    The Repubo jobs plan is that they want to eliminate government jobs. We have yet to hear how they will create jobs, just more Bush style destruction of jobs. How long is this going to pass muster? What Hogwarts magic converts firing people from government jobs into more jobs total… it doesn’t make any sense. Stop the Slithering and point out when Repubos are perverting the language — saying up is down, black is white. There is no magic here.


  3. Tim Gard says:

    I’ve heard it suggested that lowering the corporate tax rate wouldn’t make a difference anyway because the biggest cost is still labor… and how much can you lower taxes in the US to make US labor cheaper than labor is elsewhere?


  4. Roland says:

    If corporations are people, why not force them to use the personal income tax. This would reduce their deductions for all sorts of things. Or, let me use the corporate income tax, with its “many exemptions and loopholes”, mentioned above.


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