Nick Shaxson ■ Tax chart of the day: US taxes
We’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 articles
🔴Live: UN tax negotiations – First Session
What to know and expect ahead of this week’s UN tax negotiations
The secrecy enablers strike back: weaponising privacy against transparency
Privacy-Washing & Beneficial Ownership Transparency
26 March 2024
Ireland (again) in crosshairs of UN rights body
Tax policy and gender disparity: A call to action on International Women’s Day 2024
Policy research conference: How a UN Tax Convention can address inequality in Europe and beyond
The IMF’s anti-money laundering strategy review is promising, but it all comes down to implementation
Inequality Inc.: How the war on tax fuels inequality and what we can do about it
Proposal for ‘Business in Europe: Framework for Income Taxation’ (BEFIT): A wrong turn in the right direction
2 February 2024