Are corporate profits anomalously high, and will it last? Or revert?

[ghackman]

@sisterm

Corpo's took advantage of the situation and raised prices. Record profits, record inflation, clear as day with this graph, thank you.

Yet there's still tons of people in this thread arguing about semantics like the average profit margin being down. Oh no, the margin of 300% went to 280%. Sucks to be them. How ever will they survive? Guess nobody gets a raise or a bonus this year.

Edit: Crazy how someone can go out of their way to follow me around the platform because they're not understanding what I said in the first place.

 

[druzemar]

@ghackman The average profit margin of a grocery store is around 2% lol are you actually this disconnected from reality?

 

[janeway]

@druzemar I legitimately think this person has never read an earnings report before

 

[jdeegerman]

@daniellea Revert. Margins are highly mean reverting.

 

[retsepile]

@jdeegerman "Your margin is my opportunity"

-Papa Bezos

 

[elle22]

@daniellea I expect corporate taxes to go up and up, somebody has to pay for the cost of the aging of the boomers and workers already pay the bulk of the federal taxes.

About rates though... as past capital misallocations become known due to the decade of negative real rates... the Fed will have yet another excuse to repeat the experiment. Bumpy road ahead which is great for stock pickers.

 

[daniellea]

@elle22

and workers already pay the bulk of the federal taxes.

I'll kind of disagree. I'm pretty sure upper middle class income earners pay the bulk of federal taxes.

The top 50% of incomes pays 97% of Federal income tax, and the top 10% pays 73%, and the top 1% pays 42%. Then you get into the upper class that lives off dividends and cap gains, and their rates settle down to 25% or so.

For example, the 90th to 95th percentile pays 11% of tax, and the 95th to 99th percentile pays 20% of tax.

I don't count social security because that's largely self supporting, and largely kept afloat by the top end of the income cutoff, being a redistribution scheme from doctors to grocery cashiers.

This distribution arises from the fact that most total income - given by personal income times number of people at that income - is in the upper but not super-rich percentiles. There are lots of poor people, but they don't make much money, and super-rich people make a lot, but there just aren't a lot of them. But there's a ton of doctors making 250K.

I agree with Paul Krugman that a likely solution is higher taxes on the working upper middle class, who still pay little by European standards, and higher taxes on dividends and cap gains. Corporate taxes are very moderate in social democracies like Denmark, but once you cash a paycheck or a dividend check, you pay a lot.

 

[elle22]

@daniellea The US Treasury agrees with me

 

[daniellea]

@elle22 What do you mean?

 

[elle22]

@daniellea

 

[daniellea]

@elle22 Still not getting it. You'll have to use paragraphs instead of emojis.

 

[elle22]

@daniellea You will eventually understand what the sources of tax revenue in the US are, there's no need for that understanding to happen today.

 

[daniellea]

@elle22 I understand data, not emojis. I've already pointed out where federal taxes come from.

Looking at the data, I believe that the lower and middle working class don't pay much tax ... because they have very little money.