Corporate profits in the United States are reaching levels rarely seen in modern history.
At the same time, corporate tax payments as a share of the economy have fallen sharply. One labor economist says the imbalance raises a basic question about what the public is receiving in return.
“Workers get less money, corporations get more,” she wrote.
Kathryn Anne Edwards, a labor economist and columnist, argues the U.S. is now living in what she calls the “Age of the Corporation.”
In a recent column, Edwards pointed to the widening gap between soaring corporate profits and declining corporate tax contributions.
Corporate profits have surged in recent years. After reaching 8% of gross domestic product only once during the previous nine decades, after‑tax profits have averaged about 9% of GDP since 2021.
Corporate taxes have moved in the opposite direction. The federal corporate tax rate now stands at 21%, far below the 52% rate in place in 1960.
As rates declined, government revenue from corporate taxes also dropped sharply, falling from about 4% of GDP in the mid‑20th century to roughly 1.8% today.
Edwards argues that difference represents a massive shift in where economic gains are going.
If the federal government still collected the same share of GDP in corporate taxes as it did decades ago, companies would be paying far more.
“Two points of a $31 trillion economy is $620 billion,” she wrote, referring to the difference between historical and current tax revenue levels.
That gap, she argues, effectively means the government is leaving hundreds of billions of dollars each year in corporate hands in hopes that companies invest it in ways that benefit workers and the broader economy.
The Promise Of Tax Cuts
Supporters of lower corporate tax rates have long argued that businesses need lower taxes to remain competitive.
Because capital can move across borders, economists often warn that higher taxes could push companies to relocate operations to other countries.
Edwards summarized the argument this way: “Have capital, will travel.”
In other words, tax companies too heavily, and they may shift investment abroad.
But she argues the theory doesn’t fully match the outcomes seen in recent decades.
Despite rising profits, workers haven’t shared equally in the gains. Edwards wrote that the labor share of income has fallen significantly, with wages and compensation recently dropping to levels not seen since the early 1940s.
The widening gap also shows up in executive compensation. Over the past six decades, CEO pay has risen dramatically relative to average workers.
In 1960, CEOs earned about 21 times as much as the typical employee. Today that ratio is about 281 to one.
Workers Still Lack Benefits
Edwards also questioned whether the economic benefits of lower corporate taxes are reaching workers in other ways, such as benefits or workplace support.
Large portions of the American workforce still lack basic benefits.
According to the data she cited, 28% of private‑sector workers don’t receive retirement benefits from their employer.
Another 28% don’t receive employer‑provided health insurance.
Paid leave is even less common. About 73% of workers lack paid family leave, 87% have no child‑care benefits, and 20% don’t receive paid sick leave.
Edwards argued that universal federal programs providing those benefits could cost less than the roughly $620 billion difference between historical and current corporate tax revenue levels.
Tax Cuts And Wage Growth
One of the most significant recent tests of the corporate tax argument came with the Tax Cuts and Jobs Act of 2017.
The legislation reduced the statutory corporate tax rate by about 40%, dropping it from 35% to 21%.
Supporters said workers would benefit from higher pay. Some estimates suggested the average worker could eventually see wage increases of as much as $4,000 per year.
But later analysis found little evidence of that outcome. Edwards noted that a Congressional Research Service review found wage growth actually slowed following the law’s passage.
Instead, 2018 set a record for stock buybacks as companies used profits and tax savings to repurchase shares.
Local Governments Offer Incentives
The same dynamic often appears at the local level. Cities and states frequently offer tax breaks and subsidies to attract major employers, promising jobs and economic development.
But many of those deals fail to produce the expected results.
High‑profile examples include Foxconn’s planned manufacturing project in Wisconsin and the incentive packages offered during Amazon’s search for a second headquarters.
Research cited by Edwards, including analysis from the Mercatus Center, suggests many of these subsidy deals deliver little economic benefit.
As the organization concluded, “cities and states are throwing their money away” when they compete to attract corporations with tax incentives.
Public Trust Declines
Public sentiment toward large corporations has also shifted.
Gallup surveys show that in 2010, Americans were evenly split on their views of big business, with 49% holding a positive view and 49% holding a negative one.
By 2025, only 37% viewed big business positively while 62% held negative views.
Gallup also asks Americans what they see as the biggest future threat to the country, among big business, big labor, or big government.
Since 2013, the share of Americans who view big business as the main threat has climbed from 21% to 37%.
A Question Of Balance
For Edwards, the central issue isn’t simply corporate profits.
Instead, it is whether the current system distributes those gains broadly enough across the economy.
Companies often argue they need tax breaks to remain competitive and keep jobs in the United States.
But when profits reach record levels while workers see slower wage growth and limited benefits, the public may question whether the trade‑off is working.
Edwards suggests corporate America could improve its reputation by sharing more of its profits with the workers who generate them.
“Maybe that line would feel less like extortion,” she wrote, “if the past four years of corporate profits weren’t the best in a century.”