Pseudo-intellectual publications like Mother Jones are always angling for page views with posts like “Eleven Charts That Explain What’s Wrong With America” and “Overworked America: 12 Charts That Will Make Your Blood Boil.” Even the Atlantic gets in the game with “The Chart That Should Accompany All Discussions of the Debt Ceiling.” Some of these neat little graphs are actually informative; others, like the one talked up by the Atlantic, raise more questions than they answer (e.g. “can you really blame all the Bush tax cuts on Bush when Obama extended them?). Invariably, the pie chart or trend line is used by the author to demagogue about whatever injustice, from income inequality to tax avoidance, has animated him (or her) that day. This chart, from the slightly more sober New York Times, really does speak volumes, however. It’s a shame that it hasn’t gotten the sort of breathless play that Mother Jones gave the blood-boilers.
The gist of the accompanying article, by Floyd Norris, is that companies — what Republicans invariably refer to as “job creators” have never been doing better. Workers, on the other hand, have never been doing worse. The statistics are eye-opening:
In the eight decades before the recent recession, there was never a period when as much as 9 percent of American gross domestic product went to companies in the form of after-tax profits. Now the figure is over 10 percent.
During the same period, there never was a quarter when wage and salary income amounted to less than 45 percent of the economy. Now the figure is below 44 percent.
Furthermore, corporate taxes as a percentage of profits have hit an all-time low of 21 percent. The average, since 1960, is 34 percent. Personal taxes as a percentage of income have also decreased, though by a much smaller amount. They now stand at 14.1 percent of income, compared to an average of 15.1 percent.
This information, which was released by the Commerce Department, puts the lie to the conservative shibboleth that a high taxes are “killing jobs” and preventing companies from expanding. When Rick Perry claims that “the tax structure that we have in place in this country is what drove the masses away,” his rhetoric does not match the facts. And when the Republican members of the deficit-reduction supercommittee argue that the tax increases proposed by Democrats “would kill job creation and economic recovery,” they are ignoring the fact that companies have never had it so good. Surely corporate America wasn’t suffering under Ronald Reagan’s presidency, when taxes took a much larger slice of profits. Even if we take at face value the theory that “business decisions are highly sensitive to the rates of the capital gains, dividends and death tax,” we’re left with the conclusion that lower tax rates have led to . . . less hiring? Fewer jobs? The GOP lambastes President Obama’s economic policy as more of the same, but it really should be asking what it hopes to achieve with more of the same Bush-era tax rates. I’m not going to argue that higher corporate taxes would create jobs, but they would certainly help unemployed and low-income Americans weather the recession. If we’re looking for cash to fund food stamps and Medicaid, perhaps we should heed Willie Sutton’s advice, apocryphal though it may be, and look to banks and other corporations: Because that’s where the money is. This is not Occupy Wall Street-style screed against banks or any other money-making behemoth. Rather, it’s a simple acknowledgement that the people and companies who have done best over the past fifty years can afford to chip in a bit more.
As Times columnist Paul Krugman has repeated ad infinitum, the U.S. economic crisis is not one of businesses stifled by the heavy hand of government; instead, it is primarily a problem of demand. Companies are earning plenty of money; in fact, most large corporations are sitting on record piles of cash. If Apple wanted to open a thousand more stores or Pepsi wanted to build a new bottling plant, a lack of funds or a debilitating corporate tax rate is hardly preventing them from doing so. The real hurdle to expansion is the lack of demand: consumers just aren’t buying. And who can blame them? With wages at an all-time low as a percentage of GDP, it’s no wonder that Americans are reluctant to open their wallets.
Frankly, it’s enough to make your blood boil.
. . . So Well Read. . . 