No. of Recommendations: 4
Corporate effective taxes haven't changed much since 2010. There were big changes in the effective corporate tax rate in 2001 and 2008.
Corporate effective tax rate
1960 40%
1982 22%
1986 34%
1999 29%
2002 20%
2009 14%
2024 17%
Corporate Profits After Tax (without IVA and CCAdj)/National income: Corporate profits before tax (without IVA and CCAdj)
https://fred.stlouisfed.org/graph/?g=1towBBut corporate taxes are secondary. The main constraint is world GDP, which can be adjusted for corporate tax rates.
U.S. MktCap / World GDP
https://fred.stlouisfed.org/graph/?g=1tooOU.S. MktCap / (World GDP * Profits After Tax / Profits Before Tax)
https://fred.stlouisfed.org/graph/?g=1tNUb(MktCap/tax-adjusted world GDP) fell in the early 1970s because of inflation. MCTAWGDP was around 0.2 from 1974 to 1991. The dotcom boom pushed MCTAWGDP to a high of 0.75 in 2000. MCTAWGDP was 0.70 in 2023.
Market Cap = World GDP * MCTAWGDP
World GDP has increased about 4.7% per year since 1990.
Gross Domestic Product for World
https://fred.stlouisfed.org/graph/?g=1tNWQThe multiple MCTAWGDP is near the high end of its historical range of 0.15 to 0.75. MCTAWGDP in 2024 might be around 0.78 (this is the 2023 value * MktCap change / GDP change = 0.70 * 1.17 / 1.05). Negative news could send MCTAWGDP much lower. Continued positive news could nudge MCTAWGDP slightly higher.
