Thursday, November 29, 2012

Thursday: Why do I always come up with complicated things?

At some point during the day today, I saw a link to a plot of "Corporate Profits after Tax" from FRED, and that made me start wondering.  That's a pile of profits (after tax).  How does it compare with the federal deficit? 
CP is tabulated quarterly, and I've inverted FYFSD and converted into equivalent billions of dollars.
Huh.  That's kind of fucking crazy.  Let's make a thought experiment, and say that we magically went back in time to 1970 and added a 10% additional tax on corporate profits.  What does that plot look like?
I'm summing CP annually, and dividing by 10 to get this "experimental tax"
Next up, let's look at the cumulative debt that is built up over the time range (the debt in 1970 was something like $371e9, so that's ignored here).
Ok, so we're stable until the 80s (thanks Reagan), the bump is the rate increase in 1986, then magically things turn around in the 90s (thanks Microsoft), which pushes us up into surplus territory until the looting excesses of the Bush years finally crush the economy in such a way that the only way to keep people from starving is for an increase in government spending.  Still, this hypothetical 10% tax would have put the US on a far firmer economic structure.

Makes you wonder what the benefit of letting GE not pay any taxes ever must be to outweigh this scenario.

And that's how I spent my evening.
With pinkies out.
"Hey little girl.  We are two tiny lost bears, who only wish to return home to the forest. Perchance would you be willing to spare some change to help unfortunates such as us?"

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