Optimist Economy Corporate Profits Are Up. Their Tax Bill Should Be Too.
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Mar 24, 2026 A lively dive into how 2017 tax changes shrank corporate tax bills while after-tax profits hit historic highs. They explore who actually pays corporate taxes and whether higher rates would chase companies away. Research on tax incentives, relocation claims, and the big dollar gap between corporate gains and workers' share gets spotlighted.
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Corporate Taxes Plummeted After 2017 Reform
- U.S. corporate statutory rate fell from 35% to 21% in 2018 while effective rates dropped from 17.2% to 8.8% immediately after the Tax Cuts and Jobs Act.
- Catherine Edwards highlights corporations now pay a lower effective tax rate than the average U.S. household (≈14.5%), driving record after-tax profits.
Challenge The Claim That Corporations Can't Be Taxed
- Don't accept claims that corporations can't be taxed effectively; Edwards argues 'if there's a will, there's a way' to tax highly profitable firms like Amazon.
- She recommends designing stronger tax policy rather than conceding to arguments about global mobility.
Corporate Tax Hits Profits Not Inputs
- Tax incidence differs: tariffs on inputs are often passed to consumers, but corporate income taxes target profits at year-end, altering how costs are absorbed.
- Edwards emphasizes corporate tax is on profit, not gross revenue or specific inputs.