Corporations Have Biggest Share of Income in 40 Years

U.S. corporate profits have increased 21.3% in the past year and now account for the largest share of national income in 40 years, the Commerce Department said Thursday.


Strong productivity gains and subdued wage growth boosted before-tax profits to 11.6% of national income in the fourth quarter of 2005, the biggest share since the summer of 1966.


For all of 2005, before-tax profits totaled $1.35 trillion, up from $1.16 trillion in 2004 and just $767 billion in 2001.


Meanwhile, the share of national income going to wage and salary workers has fallen to 56.9%. Except for a brief period in 1997, that's the lowest share for labor income since 1966.



It's not that no one is making any money in this expansion.  When an economy grows over 3% for a few years, someone is doing well.  The current problem is corporations are making money, but instead of passing these gains onto employees in the form of higher wages, they are instead passing on gains the are barely higher than inflation and socking away the rest.


According to today's revised 4th quarter GDP report, total corporate profits increased 14.5% in the 4th quarter of 2005, up 21% from year ago period.  Total corporate profits were $1.031 trillion in 2001 and $1.478.9 trillion in the 4th quarter of 2005.  That's a total increase an inflation adjusted 30.89% and a compound annual growth rate of 6.9%.


Over the same period (2001-2005), non-supervisory wages have increased an inflation adjusted 2.04%, or a compound annual growth rate of .5%.


Where's the trickle down again?

Tags: Economy (all tags)

Comments

5 Comments

Re: Corporations Have Biggest Share of Income

But my question would be, are they paying the largest share of the income tax?  Of course the answer to that is NO.  Time for a flat tax on corporations, you know they love that idea.  My suggestion would be a flat tax of 10% of gross revenue, no deductions.  Oh, and the tax giveaways that states and localities have made of their local taxes should show as gross income.  Maybe that will stop localities from robbing their children and elderly, but I doubt it.

by Demo Dan in Dayton 2006-03-30 04:06PM | 0 recs
Re: Corporations Have Biggest Share of Income

tax giveaways that states and localities have made of their local taxes should show as gross income.

That's a really interesting idea.  Of course, localities would lobby against that heavily.

by Bonddad 2006-03-30 04:11PM | 0 recs
Re: Corporations Have Biggest Share of Income

I got the idea working in collections for a credit card company (something I couldn't take any longer).  Any writeoff of more than $400 (at that time) was reported as income and a 1099 form had to be issued.  It only makes sense that these tax waivers should be considered income as they tranlate directly to the corporate bottom line.

by Demo Dan in Dayton 2006-03-30 04:37PM | 0 recs
Re: Corporations Have Biggest Share of Income

Don't forget the most oppressed minority in the world: the directors and officers of those corporations who have had their share of compensation go from 40 times the average worker to 500 times our pay in the past 40 years.

Do you think it just could have been the income tax cut on them and the payroll tax increase on us? The clever corporatocrats. Damn them. Damn them.

Every scam has three components: the con artist, the sheep/mark for shearing, and the misdirection subterfuge. The con convinces the mark they're the beneficiary of the con and that the con man will help the mark to wealth or secrets to wisdom. And, only a fool wouldn't agree, it's so simple. Yeah.

by David Sternfeld 2006-03-30 06:00PM | 0 recs
Re: Corporations Have Biggest Share of Income

Damn. You just summed up republican economic and fiscal policies in three paragraphs.

by Michael Bersin 2006-03-31 03:44AM | 0 recs

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