Author Topic: Lower Corporate Taxes and long run EBIT Margins  (Read 1118 times)

Jurgis

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Re: Lower Corporate Taxes and long run EBIT Margins
« Reply #10 on: December 05, 2018, 09:33:59 PM »
Capitalism is dead, long live monopolies (and investors?):

https://www.bloomberg.com/opinion/articles/2018-11-25/the-myth-of-capitalism-exposed

"Before you can be rich, you must be poor." - Nef Anyo
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Cigarbutt

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Re: Lower Corporate Taxes and long run EBIT Margins
« Reply #11 on: December 06, 2018, 05:35:53 AM »
Capitalism is dead, long live monopolies (and investors?):
https://www.bloomberg.com/opinion/articles/2018-11-25/the-myth-of-capitalism-exposed
Mr. Tepper's book has been on the to-buy list but was under the impression that it may have been based on an idea (ideology?) looking for facts.

From some data, it appears that the lower corporate taxes have been financed with unsustainable debt in order to mostly fund buybacks of overvalued stock. Apart from exceptions, lower taxes have not been passed on (or trickled down to) the capital-scarce end user.

In the article you refer to, there is a quote from Chesterton who lived during the Gilded (and not golden) Age. The context of the quote is richer in meaning:
"For that is true of pedigree which is true of property; the wrong is not in its being imposed on men, but rather in its being denied to them. Too much capitalism does not mean too many capitalists, but too few capitalists; and so aristocracy sins not in planting a family tree, but in not planting a family forest."

Lower taxes is a winning argument until proven otherwise but it seems to be exacerbating a trend that the Gilded Age eventually showed to require, absent appropriate adjustments, a Great Reset.

Don't you think Jurgis? 8)

wachtwoord

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Re: Lower Corporate Taxes and long run EBIT Margins
« Reply #12 on: December 06, 2018, 06:16:02 AM »
Can you link me to the gilded age (I had to look up the term, only knew the European equivalents belle epoque and Victorian) reset information?
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"

Jurgis

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Re: Lower Corporate Taxes and long run EBIT Margins
« Reply #13 on: December 06, 2018, 06:22:02 AM »
Capitalism is dead, long live monopolies (and investors?):
https://www.bloomberg.com/opinion/articles/2018-11-25/the-myth-of-capitalism-exposed
Mr. Tepper's book has been on the to-buy list but was under the impression that it may have been based on an idea (ideology?) looking for facts.

Perhaps. Though I think he's not the only one remarking about elevated corporate margins, oligopolies and monopolies.

It's possible though that even with apparent monopolization of various industries the present is not (much) worse than the past. Perhaps even better in some ways. E.g. taking the airline example, the competition in Europe (and somewhat US) from budget airlines is way higher and the prices are way lower than what was there during the time of flag carriers (AFAIK).

Quote
From some data, it appears that the lower corporate taxes have been financed with unsustainable debt in order to mostly fund buybacks of overvalued stock. Apart from exceptions, lower taxes have not been passed on (or trickled down to) the capital-scarce end user.

In the article you refer to, there is a quote from Chesterton who lived during the Gilded (and not golden) Age. The context of the quote is richer in meaning:
"For that is true of pedigree which is true of property; the wrong is not in its being imposed on men, but rather in its being denied to them. Too much capitalism does not mean too many capitalists, but too few capitalists; and so aristocracy sins not in planting a family tree, but in not planting a family forest."

Lower taxes is a winning argument until proven otherwise but it seems to be exacerbating a trend that the Gilded Age eventually showed to require, absent appropriate adjustments, a Great Reset.

Don't you think Jurgis? 8)

Not sure what you expect "a Great Reset" to be, so I can't answer. IMO it's very hard to predict the future.

Edit: Just in case some people missed it, here's the link to part 2 of the article: https://www.bloomberg.com/opinion/articles/2018-11-26/tech-monopolies-strangle-economic-growth
The author does provide some numbers substantiating his thesis of monopolization trend. He does jump around a lot and some of his examples are anecdotal and self-contradictory, but perhaps that's because he tried to condense the book into two articles.
« Last Edit: December 06, 2018, 06:49:11 AM by Jurgis »
"Before you can be rich, you must be poor." - Nef Anyo
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"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"

Cigarbutt

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Re: Lower Corporate Taxes and long run EBIT Margins
« Reply #14 on: December 06, 2018, 07:06:30 AM »
The intention is not to derail the topic initiated by LongHaul.
Opinion: the corporate tax is not being passed on to the consumer.

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@Jurgis and watchwoord
This is not about expectations or The Future, which is unknowable, but more about an obsession in being prepared for all the potential futures.

Summary: The theme is related to what Mr. Ray Dalio talks about when he sees a correlation between wealth and business interest concentration AND the rise of populist movements and divided politics.
https://www.marketwatch.com/story/the-next-financial-crisis-will-threaten-capitalism-and-democracy-ray-dalio-warns-2018-09-13
Nobody knows the future but the price of inaction can be high.
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Back to topic.

Jurgis

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Re: Lower Corporate Taxes and long run EBIT Margins
« Reply #15 on: December 06, 2018, 08:10:42 AM »
I disagree with Cigarbutt: the topic was (is) dead, so I'd rather post and discuss related material here than create a new thread.
"Before you can be rich, you must be poor." - Nef Anyo
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"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"

rb

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Re: Lower Corporate Taxes and long run EBIT Margins
« Reply #16 on: December 07, 2018, 09:44:50 AM »
Can you link me to the gilded age (I had to look up the term, only knew the European equivalents belle epoque and Victorian) reset information?
This thread isn't in the politics section, so this is all from a historical perspective and let's leave it at that.

The Guilded Age refers to a historical period in America, not globally. It was during the latter part of the 1800s. The Belle Epoque in Europe overlapped the Guilded Age. However the Belle Epoque went on for longer (until 1914?) whereas it is clear that the Guilded Age was over by 1900 in the US. The Guilded age was marked by income inequality and its most defining feature were the giant Trusts.

The great reset was the period that followed - the Progressive Era. You can safely say that the progressive era started with Teddy Roosevelt becoming president. Though one can make an argument that it stated with the passing of the Sherman Anti-Trust Act. This period was marked by trust-busting, increased regulation, increased labour protection and unionization, increased environmental protection and conservationism.