Tax Policy, Fairness, & The Economy - Part 3

The first two posts in this Cogport series covered the subject of Federal Taxes and Personal Income.

This Post will cover Federal Taxes on Corporations. 

History of Corporate Tax Rates

From 2000 to 2017 Corporate Tax Rates were graduated (Progressive).

Income Brackets:

• 15% on the first $50,000 of taxable income.

• 25% on income between $50,001 and $75,000.

• 34% on income between $75,001 and $10 million.

• 35% on income over $10 million.

  
  

2018  Change - The Corporate Tax Structure was reduced significantly by President Trump:

No Income Brackets:

• A Flat Tax of 21% on all corporate income.

History of Corporate Tax Paid:

Corporate Taxes Year	Total Corporate Taxable Income ($ Billion)	Total Corporate Tax Paid             ($ Billion)
2016	1470	327
2022	2720	425

Observations:

From 2016 to 2022 Corporate Taxable Income Increased by 85%.

From 2016 to 2022 Corporate Tax Paid Increased by 30%.

These years have been a boom time for corporations with both generic growth in income and the reduced tax burden created in 2018.

That is reflected in stock market returns:

At the end of 2016, the S&P 500 index closed at 2,238

At the end of 2022, the S&P 500 index closed at 3,839

That is a 71% increase, or 9% average per year.

For Perspective, that compares to an 8.8 % average per year since 2000 - 2022.

On Friday, September 27, 2024, the S&P 500 index closed at 5,738

That is a 49% increase since the end of 2022 (a year depressed by the Covid Pandemic).

 If you own stock investments, a 401K, or a Pension Plan, it has been a great time over the last Eighteen Months. 

SUMMARY

Cogport questions the change in Corporate Tax structure in 2018.

It was proposed as a Policy to encourage corporate and overall economic growth.

The outcome has led to issues of fairness in overall Tax burdens, and balloon values in the stock market.

Cogport will address this question in the next Post.

David Hollaender                   October 2, 2024

Cogport.com