Just My Opinion: Perhaps inflation is really linked to corporate greed

GDP, CPI, WPI, corporate profits, tax avoidance, consumer confidence … goes on and on, as we all try to understand the state of an economy that some politicians say is soaring and others say is in the tank. Which is it?

Don’t expect me to tell you. I’m no economist. Although economists like the University of Rhode Island’s Len Lardaro will tell you the economy is doing well.

What I do know is I just wrote a check to the feds and state for taxes I owe. What I paid in taxes, percentage wise, is far more than the 6.1 percent Amazon paid in 2023 on more than $35 billion in U.S. earnings. I suspect that goes for most taxpayers, aside from the dozens of corporations that either paid very little in taxes, while profitable, or none at all.

So, here are some things that are clear:

• There is a wide gap between Consumer Price Index, the change in prices as measured over more than 200 categories, and the Wholesale Price Index, the price retailers and others pay for the goods and services they pass onto consumers. CPI, for the latest month, year over year, was 3.8 percent. WPI for the last latest month, year over year, was 2.1 percent, and for the last month, 0.2 percent, less than expected.
• Wages, on average, exceeded inflation. According to a Willis Tower Watson survey wages in 2024 have increased 4 percent, after increasing 4.4 percent in 2023. A Mercer poll put those numbers at 3.8 percent in 2024, and 4.1 percent in 2023. If you haven’t received at least pay raises equal to those, then your problem isn’t with the government, or economy, but with your employer.
• Because of a very robust job market in 2020-21, a period called the “great resignation” pay raises were 4.5 percent and 4.1 percent.
• Corporate profits meanwhile might be considered extraordinary. According to surveys, corporate profits increased in the United States from $786 billion in 2000 to $3.5 trillion in 2022. 
• CEO Pay, from the Economic Policy Institute, key findings:
  • While CEO pay declined slightly in 2022, from 1978–2022, top CEO compensation shot up 1,209.2% compared with a 15.3% increase in a typical worker’s compensation. 
  • In 2022, CEOs were paid 344 times as much as a typical worker in contrast to 1965 when they were paid 21 times as much as a typical worker. 
  • To illustrate just how distorted CEO pay increases have gotten: In 2021, CEOs made nearly eight times as much as the top 0.1% of wage earners in the U.S. 
  • Exorbitant CEO pay is not just a symbolic issue—it has contributed to rising inequality. CEOs are getting paid more because of their leverage over corporate boards, not because of contributions they make to their firms. Escalating CEO pay in recent decades has likely pulled up the pay of other top earners. This concentration of earnings at the top leaves’ fewer gains for ordinary workers. 
• According to Statista, In 2022, the United States had the largest economy in the world, with a gross domestic product of just under 25.5 trillion U.S. dollars. China had the second largest economy, at around 18.1 trillion U.S. dollars.
• Unemployment remains low in the United States, and job growth high.

According to research from the American Center for Progress, many Fortune 100 companies have an effective tax rate of less than 10 percent. Here are just a few examples:

• Amazon’s effective federal income tax rate was 6.1 percent in 2021, with $35.1 billion in U.S. earnings and $2.1 billion in federal income taxes.
• ExxonMobil’s effective federal income tax rate was 2.8 percent in 2021, with $9.3 billion in U.S. earnings and $236 million in federal income taxes.
• Microsoft’s effective federal income tax rate was 9.7 percent in 2021, with $33.7 billion in U.S. earnings and $3.3 billion in federal income taxes.

• Verizon’s effective federal income tax rate was 6.9 percent in 2021, with $27.2 billion in U.S. earnings and $1.9 billion in federal income taxes.
• Ford’s effective federal income tax rate was 1 percent in 2021, with $10 billion in U.S. earnings and only $100 million in federal income taxes.
• GM’s effective federal income tax rate was 0.2 percent in 2021, with $9.4 billion in U.S. earnings and only $20 million in federal income taxes.
• Chevron paid only $174 million in federal income taxes, earning $9.5 billion last year. That’s an effective federal income tax rate of only 1.8 percent.
• Bank of America’s effective federal income tax rate was 3.5 percent in 2021, with $31 billion in U.S. earnings and only $1.1 billion in federal income taxes.
• FedEx’s effective federal income tax rate was 4.2 percent in 2021, with $4.7 billion in U.S. earnings and only $199 million in federal income taxes.
• Nike’s effective federal income tax rate was 5.9 percent in 2021, with $5.6 billion in U.S. earnings and only $328 million in federal income taxes.
• Coca-Cola’s effective federal income tax was 7.1 percent in 2021, with $3.4 billion in U.S. earnings and only $243 million in federal income taxes.

Corporate greed – you decide.