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April 03, 2006

Follow the Money

So, who has done well financially in these last 5 years?  We've heard some of this but it's always good, if depressing, to be reminded of actual figures.  Hale Stewart over at Blogging of the President, dug into the latest Commerce Department numbers and reports that total corporate profits increased 30.89% between 2001 and 2005, adjusted for inflation, a compound annual growth of 6.9%.  Meanwhile during the same period, non-supervisory wages increased 2.04%, adjusted for inflation, a compound annual growth rate of 0.5%.  He says:

When an economy grows over 3% for a few years, someone is doing well.  The current problem is corporations are making money, but instead of passing these gains onto employees in the form of higher wages, they are instead passing on gains that are barely higher than inflation and socking away the rest.

Backed up by these figures:

U.S. corporate profits have increased 21.3% in the past year and now account for the largest share of national income in 40 years, the Commerce Department said Thursday.  Strong productivity gains and subdued wage growth boosted before-tax profits to 11.6% of national income in the fourth quarter of 2005, the biggest share since the summer of 1966. For all of 2005, before-tax profits totaled $1.35 trillion, up from $1.16 trillion in 2004 and just $767 billion in 2001.

Meanwhile, the share of national income going to wage and salary workers has fallen to 56.9%. Except for a brief period in 1997, that's the lowest share for labor income since 1966.

This shift in who gets what portions of the money pie is not an accident.  According to David Cay Johnston, Pulitzer Prize winning investigative reporter for the New York Times and author of the book, Perfectly Legal, the tax strategists for corporations and the wealthy have been patiently and consistently inserting changes into the tax laws to favor their clients for twenty-five years and have been able to do that quite easily since the Republicans took over Congress in 1994.

Yet another reason . . . 

Posted by Lynn Allen on April 3, 2006 at 11:41 AM in National and International Politics | Permalink

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