Winner Takes All: How the Top 1% of Firms Capture the Profits

This article presents a quantitative analysis of corporate profit concentration across the U.S. economy from 1995 to 2024, drawing on Orbis Historical consolidated firm-level data to demonstrate that the top 1% of U.S. firms capture over 93% of total after-tax profits, with the top 0.1% exercising disproportionate gravitational pull over profit flows across the entire corporate landscape. Through sectoral disaggregation, the author shows that concentration is most extreme and structurally entrenched in the knowledge economy — particularly technology and pharmaceutical industries — where intangible assets, network effects, and zero-marginal-cost scalability generate oligopolistic winner-takes-all dynamics, with 92% of knowledge sector profits captured by the top 1% by 2022. The article further demonstrates that profit concentration is compounded by a widening effective tax rate differential, with leading knowledge sector firms paying approximately 10 percentage points less in effective tax than traditional sector counterparts by 2024, a gap attributed to IP-based profit shifting, tax arbitrage under the U.S. Tax Cuts and Jobs Act, and Ireland's preferential intangible asset regime. Situating these empirical findings within a political economy framework, the author argues that the structural convergence of profit concentration, market power, and tax minimisation constitutes a transition from competitive capitalism toward a rentier or techno-feudal economy, in which a corporate oligarchy exercises outsized lobbying influence over trade, digital, and tax policy, hollowing out state capacity and undermining democratic governance. The article calls for coordinated antitrust enforcement, international tax reform, and constraints on IP abuse to rebalance market power.

Part of a series of blog posts from the ERC funded project Democracy Challenged published on the project website https://democracychallenged.com/