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Some thoughts on corporate profits, the price of government, and our politicians….

April 20, 2007

Furtune 500 vs. Federal Government

hpc-larger.jpgFortune Magazine has once again published its list of the 500 American companies with the most income in the past year.


2006 was a record-breaking year for American business; the Fortune 500 spent $785 billion less than their income.


In personal finance, spending less than your income is called saving for the future.  But in corporate finance it’s called turning a profit, which is considered evil in some circles.


So get ready to hear howls of indignation assailing these companies for turning a profit – a la Senator Clinton’s recent eagerness to take more corporate profits and do something virtuous and noble with them.


As we consider whether it’s immoral for Wal-Mart to profit – i.e. save – 3 or 4 cents of each dollar of its income, please consider the following:


In 2006, the Federal Government took in more money ($2,043 billion) than the top 10 companies on Fortune’s list ($1,983 billion).


Breaking that number down – the Federal Government received $8,023 per American, while Wal-Mart, Exxon Mobil, General Motors, Chevron, ConocoPhillips, General Electric, Ford, Citigroup, Bank of America, and AIG (the insurance company) combined took in $6,610 per American.


Elected officials should spend more time figuring out how we can spend less money on government and less time devising ways to punish companies that save more than they spend.


P.S.: In case you’ve just got to beat up on the corporations: cut up your credit cards, pay cash for your purchases, quit eating fast food, buy used cars that get good gas mileage, and save 5% of your income.

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