The odd financial crisis aside, the past 30 years hasn't been a bad time to be a large multinational corporation. Interest rates have steadily fallen, and the resulting surge in credit has been great for revenues.
Yet at the same time, labour costs have fallen: the share of US corporate value added going on wages eventually collapsed relative to corporate profits around 2000.
Finally, corporate tax rates have fallen fast as globalisation has allowed big companies effectively to choose where to pay (or not pay) their taxes.
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That's why Google paid a mere £20m in the UK in tax last year on revenues of $5.6bn; why Facebook paid no corporation tax at all in the UK last year; why US companies are estimated to hold some $2trn in cash offshore; and possibly part of the reason why, according to Capita, the biggest listed groups in the UK have £53bn in cash sitting on their books. Revenues up. Costs and taxes down. What's not to like?
The answer is mean reversion. Given the politics of income inequality, it isn't hard to imagine a general rise in wages such that the division of returns to capital and labour returns to normal.
It is harder to imagine a rise in interest rates anytime soon, although I think we all accept that, in time, this cycle too will turn. However, the one that many people find absolutely impossible to imagine is a rise in the corporation tax take.
Today's multinationals are footloose and fancy free, they say. They can pay tax anywhere they want. They are rolling around in money. They can afford to hire armies of smart accountants and lawyers to find a loophole or ten in every page of tax legislation.
The only thing governments can do in response is to cut corporate tax rates to zero and hope to boost employment (and hence employer and employee taxes) along the way. It's a race to the bottom and the UK is already well on the way. Ireland is even further.
There are little fightbacks along the way, such as the 'bank levy'. In his Autumn Statement this week, George Osborne introduced another one: the idea of a 'diverted profits tax' (commonly known as the 'Google tax') to be paid by companies who artificially report their profits in other countries to avoid paying UK tax.
You might think that sounds like a good idea, but one of the first press releases I got on the matter batted it away as irrelevant: "It is unlikely to give the average multinational much cause for concern...most multinationals will be able to sidestep these new rules without breaking into a sweat."
I don't buy this. The idea that there will always be another loophole or a jurisdiction ready to charge less relies on the idea that there is such a thing as a developed country with a respectable legal and property rights system that isn't completely broke and dealing with the social consequences of having to cut services as a result of being broke.
There isn't. Look back at Mr Osborne's statement and you will see that the deficit and debt reduction parts of his plan aren't going particularly well. He needs to get his hands on some of the £53bn mentioned above. And contrary to popular belief, he is more than able to get it.
That's partly because he's in charge. In times of crisis, it becomes more clear than usual who gets to make the law and who gets to follow it. And partly because he isn't exactly working alone on this one.
When he trailed the idea of this new tax in October he was pretty firm in noting that "some technology companies go to extraordinary lengths to avoid paying tax here"; that this abuses the "trust of the British people"; and that "we will put a stop to it".
Pretty much everyone outside the affected companies agreed that seemed reasonable. Institutional investors are increasingly onside too. They don't want their own reputations to be affected by investments in companies likely to be singled out as an example by the government or by angry mobs of welfare recipients blaming them for 'the cuts'.
Reputation matters. Ask the banking sector. Or ask Starbucks, now known as much for avoiding taxes as selling coffee. Ask those companies in the US referred to by Obama a few months ago as "corporate deserters" for pursuing "tax inversion" schemes.
And investors aren't sure that companies which spend a lot of time avoiding tax are good long-term investments, either. Aggressive tax planning brings a risk of volatile profits later when governments challenge schemes.
It suggests cultural issues too; if a company is paying a very low tax rate, is it also paying miserable wages, or cutting corners on safety, or treating its suppliers poorly? Those are just the sorts of issues that might come back to haunt a business.
A few months ago the head of one of Britain's biggest accounting firms announced that whatever Mr Osborne said they would "carry on as before" helping companies avoid tax. Governments, he said, should "legislate if they want a different outcome." Well, they are now. Can tax-avoiding firms weather all this "without breaking a sweat?" I don't think so.
This matters to investors. Banks' share prices now carry a discount for their 'most-hated' status. We know they are the first place the state stops when it needs a little petty cash, as indeed it did this week. Maybe it's time to build a little legislative risk into the share prices of other large companies, too.
If profits can be turned into tax revenues with a stroke of Mr Osborne's pen, it might be that forecast price/earnings ratios are a tad too high. So before you invest, look at how much tax the company is paying alongside. If it seems rather low, then ask why. Everyone else is.
This article was first published in the Financial Times.
