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.
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.