Faux Frais of Production - Illustration

Illustration

In 2002, the US IRS tax-assessed capital costs of all US corporations with a positive net income included the following items:

• Depreciable assets (includes depletable and intangible assets) $4,715 billion
• Less: Accumulated depreciation (includes accumulated depletion and amortization) $2,330 billion
• Depreciation charged $411 billion
• Depletable assets $148 billion
• Less: Accumulated depletion $76 billion
• Depletion charged $6 billion
• Land $213 billion
• Intangible assets (amortizable) $1,411 billion
• Less: Accumulated amortization $269 billion
• Amortization charged $68 billion
• Other assets $2,396 billion
• Intermediate goods $7,541 billion
• Compensation of corporate officers $262 billion
• Salaries and wages $1,362 billion
• Employee benefit programs $167 billion
• Pension, profit-sharing, stock bonus, and annuity plans $99 billion
• Repairs $85 billion
• Bad debts $98 billion
• Rent paid on business property $260 billion
• Taxes paid $283 billion
• Interest paid $638 billion
• Advertising $160 billion
• Charitable contributions $10 billion
• Net loss, non-capital assets $15 billion
• Other deductible operating expenses $1,752 billion

In the NIPAs, the Bureau of Economic Analysis adds $26.2 billion worth of expensing on meals and entertainment, oilwell bonus payments written off, adjustments for insurance carriers and savings and loan associations, amortization of intangible assets, and tax-exempt interest income.