The Rate of Return to Corporate Capital and Factor Shares: New EstimatesUsing Revised National Income Accounts and Capital Stock Data
This paper presents new evidence on the rate of return on tangible assets in the United" States, incorporating the recently-revised national accounts as well as new estimates of the" replacement cost of the reproducible physical capital stock. The pretax return on capital in the" nonfinancial corporate sector has averaged 8.5 percent over the 1959-1996 period. The paper" also presents new estimates of the total tax burden on nonfinancial corporate capital averages 54.1 percent over this time period. For the 1990s, this tax rate corporate income taxes, corporate property taxes, and taxes on stock- and bondholders 42.1 percent of pretax profits. The average pretax rate of return for the 1990-1996 period is 8.6" percent, and the average after-tax return is 5.0 percent. Although the accounting return to" corporate capital has been higher in the mid-1990s than at any previous point in the last two" decades, the substantial volatility in the return series makes it premature to conclude that these" years represent a departure from past experience.
Published: Carnegie-Rochester Conference Series on Public Policy 48 (1998) 211-246