Tax chart of the day: US taxes

   0   1 Blog, Corporate Tax

US taxesWe’ve just blogged Citizens for Tax Justice’s latest report on U.S. Fortune 500 companies and their unpaid taxes. Now, from the Financial Times, a chart.

The graph shows starkly one of the great faultlines in globalisation. The FT cites Bank of America analysts as saying that falling tax rates are the biggest factor pushing up profit margins at non-financial S&P 500 companies above the historic average:

“Roughly two-thirds of the improvement in net margins can be attributed to changes below the operating line, specifically interest expense and taxes.”

And those improvements in net margins are being shovelled, very significantly, into executive remuneration. Yet again, improvements in profitability (or executive remuneration, for that matter) are so often not attributable to executive talent, but to other factors. The trillions held offshore, uninvested, are a sign that those profits, extracted substantially from workers and ordinary taxpayers, aren’t being ploughed back into productive invesments.

A quote from the ubiquitous Thomas Piketty (and yes, some of us have read it, cover to cover):

“The reduction of top marginal income tax rates and the rise of top incomes do not seem to have stimulated productivity (contrary to the predictions of the supply side theory) or at any rate did not stimulate production enough to be statistically detectable at the macro level. (P510)
. . .
Our findings suggest that sky-rocketing executive pay is fairly well explained by the bargaining model (lower marginal tax rates encourage executives to negotiate harder for higher pay) and does not have much to do with a hypothetical increase in managerial productivity.” (p512)

Related Posts

Launch of international research collaboration, #AltAusterity

alt austerityToday is the launch of #AltAusterity, a new, international research collaboration of which Tax Justice Network is a partner.  The project aims to stimulate public debate on the subject of austerity though high quality research. It is a response to the lack of evidence which has underpinned the current policy agenda on austerity. The project […]


RB tax avoidance – company calls for public country by country reporting after Oxfam report reveals profit shifting

pictureOxfam has today released a report on tax dodging by RB, the company formerly known as Reckitt Benckiser and the maker of thousands of well known household products. The report looks at the 2012 restructuring of the company which saw it set up ‘hubs’ in the Netherlands, Dubai and Singapore, all well known corporate tax […]


Half measures mean Mauritius will continue to be a tax haven for the developing world

MauritiusThere was news this week that Mauritius has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). This is an initiative from the OECD to allow countries to take measures designed to stop tax avoidance by multinational companies and put them into their existing network of […]


G20: Pressure rising on tax haven USA

HamburgWhilst the eyes of the world focused on the isolation of the US from the ‘G19’ position on climate change, something remarkable played out elsewhere in the process. Following closely the common EU position that we highlighted a few days ago, the G20 communique devotes important space to tax justice. It’s so good we quote […]


Will the G20 ever end the global problem of tax avoidance and tax evasion?

HamburgAhead of the G20 Summit in Hamburg this week our own George Turner has published this op-ed in the German newspaper Die Tageszeitung today. The article discusses why, despite sustained political engagement from world leaders, we are still some way from solving the problem of tax avoidance and tax evasion. Here’s an English translation of the article:


Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top