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A Re-Examination of Corporate Profits and Taxes, 1960-1973

Daryl Winn
Business Economics
Vol. 11, No. 3 (May 1976), pp. 18-22
Stable URL: http://www.jstor.org/stable/23481459
Page Count: 5
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A Re-Examination of Corporate Profits and Taxes, 1960-1973
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Abstract

The use of historical costs to determine the profitability of enterprise in times of inflation greatly overstates the ability of non-financial corporations to maintain and expand production. When current costs are subtracted from revenues in determining profits, corporate profits in the "record" year of 1973 are reduced to levels considerably lower than those earned during the 1960—61 recession. This overstatement of corporate profits has served to divert attention away from a fundamental analysis of the causes and cures of inflation. Instead, the overstatement of corporate profits has lead to proposals for additional taxes on excessive profits, when, it appears, there are excessive taxes on inadequate profits.

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