Tuesday, September 4, 2012

Do the Latest GDP and Profit Data Justify Tax Cuts for ‘Job Creators’?

This week’s second estimate of US GDP shows a disappointing Q2 growth rate of 1.7 percent, just slightly faster than the 1.5 percent of the advance estimate released a month ago (see attached slideshow for details). These latest data ensure that weak GDP growth and what to do about it will remain major issues in the presidential election campaign.

 On the GOP side, the leading proposal for getting growth back on track is to cut taxes for ‘job creators,’ to use the favored code word for top income earners. The idea has a certain logic to it. We know that growth comes from investment. We know that profits motivate investment and profits taxes reduce that motivation. It stands to reason, then, that weak profits and high taxes would be likely culprits for slow growth–except for one awkward fact.

The awkward fact is that corporate profits, both before and after taxes, are running at or close to record levels. >>>Read more

Follow this link to view or download a classroom-ready slideshow with charts of the latest GDP and profits data

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