Don't cry for profits, corporate America

Corporate tax cuts are coming in the United States. While this push pre-dates the presidential election in November, US President Donald Trump's "Make-America-Great-Again" slogan has sealed the deal. Beleaguered US businesses, goes the argument, are being squeezed by confiscatory taxes and onerous regulations - strangling corporate earnings and putting unrelenting pressure on capital spending, job creation and productivity, while sapping America's competitive vitality. Apparently, the time has come to give businesses a break.

But if the problem is so simple, why hasn't this fix already been tried? The answer is surprising.

For starters, it is a real stretch to bemoan the state of corporate earnings in the US. Commerce Department data show that after-tax corporate profits (technically, after-tax profits from current production, adjusted for inventory and depreciation-accounting distortions) stood at a solid 9.7 percent of national income in the third quarter of last year.