CHART: Corporate Profits Skyrocket While Corporate Taxes Plummet

By Pat Garofalo/Think Progress

Corporate profits are currently at an all-time high (while worker wages as a percentage of the economy have plummeted to record lows). But despite those sky-high profits, corporate income tax revenue is projected to bejust 1.5 percent of GDP this year, below the recent average and far below the amount raised by the tax just a few decades ago.

As the Century Foundation noted in this chart, the corporate income tax, as a share of total government revenue, used to track reasonably well with corporate profits. But in the last decade, the two have become decoupled:

As the Century Foundation’s Benjamin Landy explained, “In 1952, the corporate income tax accounted for about one third of of all federal tax revenue. But, over the years, U.S. multinationals have devised increasingly complex tax avoidance schemes, far beyond the ability of the IRS to credibly monitor or enforce. Although the corporate tax rate was also lowered significantly in 1986, tax avoidance is one of primary reasons why corporate taxes supply less than 9 percent of federal revenues today.”

Between 2008 and 2011, dozens of multinational corporations paid no corporate income tax at all, despite making billions in profits. In 2011, the effective tax rate paid by American corporations fell to 12.1 percent, a forty-year low.

‘Anti-Business’ Obama Is Best President For Corporate Profits Since 1900

 By Pat Garofalo/Think Progress

Since he came into office, Republicans have consistently attacked President Obama for supposedly being anti-business. As ThinkProgress noted last week, the data shows that this charge is nonsense.
In fact, as the financial website Motley Fool noted today, President Obama is far and away the best president for corporate profits since 1900:
Even if corporate profits under Obama are compared to the 2008 peak — in order to erase the effect of the financial crisis — “average annual corporate profit growth under President Obama is 6.8%,” or nearly three times as large as it was under President Reagan. Both Presidents Bush actually oversaw corporate profit declines during their terms. Meanwhile, real GDP growth per capita is far higher under Obama than it was under either Bush administration.

While Corporate Profits Are At 60-Year High, Main Street Businesses Continue To Struggle

By Travis Waldron/Think Progress

Even as the economy struggles, corporate profits continue to rise. Wells Fargo, the largest consumer lender in America, announced today that its third-quarter earnings rose 21 percent, to $4.1 billion. Citigroup, the nation’s third-largest bank, also released its earnings statement today, announcing that its third-quarter earnings rose 73 percentover last year, with $3.8 billion in profits. Even though JP Morgan Chase saw its earnings fall from a year ago, it still raked in more than $3 billion in profits.

Corporate profits as a share of the nation’s gross domestic product, in fact, are at their highest point since 1950. Recent snapshots, however, tell a much different story on Main Street, where small businesses are limping through an economic recovery that treated corporations much more kindly. According to the National Federation of Independent Businesses’ September report, two out of every five small businesses reported that profits are falling:

Reports of positive earnings trends were 1 point worse in September at a net negative 27 percent of all owners, not a pretty picture, but still one of the best readings in years. Not seasonally adjusted, 17 percent reported profits higher (down 3 points), and 40 percent reported profits falling (unchanged). Corporate profits are at a record high level as a share of GDP, but the story is very different on Main Street.

Small business sales are also dragging, as the percentage of all firms reporting higher sales fell over the last three months, and more businesses reported sales trending down than up. Worse yet, small business owners expect sales to continue falling over the next three months.

Corporations aren’t content just ignoring these problems, instead choosing to help exacerbate them. The largest corporations have continued hoarding cash instead of investing in job creation that would help small businesses and the economy recover. At other times, they’vespent millions lobbying for ineffective tax holidays or lax regulatory rules that led to the 2008 financial crisis. They continue to pay some of the world’s lowest tax rates. And executive pay at the largest companies continues to rise even as wages remain stagnant for most American employees. That has led to growing income inequality that rivals many African nations, saddling the American economy with problems that are becoming increasingly hard to fix.