Cato @ Liberty » Marginal Tax on Corporate Profits was 74.2% in the 1st Quarter

Marginal Tax on Corporate Profits was 74.2% in the 1st Quarter

Posted By Alan Reynolds On May 30, 2009 @ 4:40 pm In Finance, Banking & Monetary Policy,Tax and Budget Policy | Comments Disabled

From the Bureau of Economic Analysis ^[1] news release of May 29:

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $42.6 billion in the first quarter. . . Taxes on corporate income increased $31.6 billion. . . [therefore] profits after tax . . . increased $11.1 billion.

In other words, taxes extracted 74.2% of any added (marginal) corporate earnings, leaving only scraps for stockholder.

Companies that lost money, on the other hand, were often bailed out and/or nationalized.

Why bother even trying to maximize profits or minimize losses?

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[1] Bureau of Economic Analysis: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

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