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Richard Koo likes the US corporate tax cuts

Summary:
America’s effective corporate tax burden has collapsed over the past few decades:This sharply raised the return to investors in US corporations. Net interest payments plus profits after taxes (excluding the Federal Reserve) have nearly doubled relative to the gross value added by the private corporate sector. The decline in the tax burden is almost entirely responsible:(Chart put together from National Income and Product Account tables 1.14, 3.2, and 6.16. Things look somewhat different if you restrict the analysis to nonfinancial corporations, but the difference between the trends in pretax and after-tax profits is still large and significant.)Investors also benefited from reductions in the government’s collection of interest, dividend, and capital gains income. Those changes are harder

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America’s effective corporate tax burden has collapsed over the past few decades:

Matthew C Klein
I write about the economy and financial markets for Bloomberg View. Before that I wrote for The Economist. I have worked at the world’s largest hedge fund and read every FOMC transcript since May, 1987

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