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Ehren Stanhope, O’Shaughnessy Asset Management – The Great Inflation, Factors, and Stock Returns (The Best Investment Writing Volume 6)

The Meb Faber Show - Better Investing

CHAPTER

Corporate Tax Rates Exasperate Inflationary Forces

High tax rates under high inflation regimes exasperate inflationary forces by promoting corporate conspicuous consumption. In such an extreme situation, it behooves corporations to rack up expenses to reduce pre tax profits. The slope and level of the forty eight % curve is much higher and steeper than what we face today. Monetary policy has remained sluggish in recent years, mitigating the risk of an inflationary spike. There was a fly wheel that can tate the growth of wages and inflation, notably at full employment. Rising wages fuel demand for products and services, which pushes up prices,. pushing up laborer's demand for wage increases, et cetera.

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