Groundwork’s Bilal Baydoun on Corporate Profits: “We must ensure corporations pay back what they gained through profiteering”

Groundwork’s Bilal Baydoun on Corporate Profits: “We must ensure corporations pay back what they gained through profiteering”

Today, the Bureau of Economic Analysis (BEA) released new data showing that corporate profits ticked down slightly, but remain historically high. Groundwork’s Director of Policy and Research Bilal Baydoun reacted with the following statement:

“Corporate profits remain historically high, and it’s undeniable that corporations have scored sky-high profits by hiking their prices and squeezing already vulnerable families. When the Trump tax law expires next year, we must ensure corporations pay back what they gained through profiteering by putting corporate tax increases firmly on the table.”

Email press@groundworkcollaborative.org to speak with one of Groundwork’s experts about the role of corporate profits in high prices. 

Background

• Big corporations are using their power to manipulate prices and net record profits by deploying algorithmic pricing, shrinkflation, skimpflation, rigged scales, and even alleged collusion.
• A recent report by the Federal Trade Commission found that “some firms seem to have used rising costs as an opportunity to further hike prices to increase their profits, and profits remain elevated even as supply chain pressures have eased.” As a result, a recent study from the Council of Economic Advisers found that grocery profit margins since the pandemic have reached their highest level in two decades.
• In January, Groundwork found that from April to September 2023, corporate profits drove 53% of inflation. Comparatively, over the 40 years before the pandemic, profits drove just 11% of price growth.
• In 2017, President Trump and Congressional Republicans slashed the corporate tax rate from 35% to 21% on the false promise that the cuts would lead to a $4,000 boost in income for the typical family. A recent study found that 90% of workers saw no gain whatsoever from the cut.
• A February Institute on Taxation and Economic Policy paper that studied 342 profitable corporations found that these companies paid an effective tax rate of 14.1%, well below the historically low statutory rate of 21% signed into law by the Trump administration. Low taxation enables corporations to use their market power, weak competition, and economic emergencies to profiteer off of families by hiking prices.