From: Jurriaan Bendien (andromeda246@HETNET.NL)
Date: Thu May 20 2004 - 19:53:24 EDT
In interpreting these statistics, which may give a trend indication, I think it should be borne in mind that the NIPA data sets, or stock exchange data based on corporate reports, differ very significantly from tax data, and also that a very significant amount of US corporate profit earnings are not declared in the USA, but are lodged in tax shelters abroad. For example, in an article in the Boston Globe (24 February 2004), Stephen J. Glain cited Martin A. Sullivan, an economist and columnist for TaxNotes, who concluded from his analysis of the Commerce Department data for 2001, that the US companies recorded 46 percent of their total overseas profits (partly included by BEA in GNP and the current accounts), i.e. nearly half, in tax havens, even although these countries accounted for only 19 percent of the overseas economic activity of these companies, if measured by the value of their assets, sales, costs of equipment, and number of employees. Also, he said that in 1998, the NBER had discovered that $154 billion (half the gap between "book value" and "tax-declared" income for that year), could not be reconciled using ordinary accounting methods, and attributed at least part of the difference to deceptive accounting practices. The US Tax Advocate additionally notes very significant underreporting of profit income by self-employed proprietors. That is just to say, discovering empirically just how much profit really is generated by US capitalism each year would be a complex undertaking, which would have to involve a range of estimation procedures based on the observable empirical evidence. But it's clear that official profit aggregates typically understate the real magnitudes, and the greater the deregulation of the market economy, the greater that understatement is likely to be. Jurriaan
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