Report
Everything points to a fall in the return on equity for shareholders in the future
National income is divided between wages, taxes on capital income and net capital income. In contemporary capitalism, the return on equity for shareholders is high, as the share of capital income in national income has increased as a trend. But, in the future, an equilibrium with a lower return on capital (a smaller share of capital income in GDP) will probably inevitably emerge. This is because: There is increasing demand to lift low wages and to balance income distribution; Governments have multiple and legitimate needs for additional public spending (healthcare, education, research, security, reindustrialisation, energy transition). This spending will have to be financed, which will probably be done by increasing taxation on capital income and capital. In this new equilibrium, the share of wages and taxes in GDP will increase, and the share of capital income will decrease.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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