You have commented 339 times on Rantburg.

Your Name
Your e-mail (optional)
Website (optional)
My Original Nic        Pic-a-Nic        Sorry. Comments have been closed on this article.
Bold Italic Underline Strike Bullet Blockquote Small Big Link Squish Foto Photo
Submit your comments on this article
Economy
Biggest revenue drop since 1932
2009-08-04
The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression.

"Our tax system is already inadequate to support the promises our government has made," said Eugene Steuerle, a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation.

"This just adds to the problem."

While much of Washington is focused on how to pay for new programs such as overhauling health care -- at a cost of $1 trillion over the next decade -- existing programs are feeling the pinch, too.

Social Security is in danger of running out of money earlier than the government projected just a few month ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining.

The national debt already exceeds $11 trillion. And bills just completed by the House would boost domestic agencies' spending by 11 percent in 2010 and military spending by 4 percent.

For this report, the AP analyzed annual tax receipts dating back to the inception of the federal income tax in 1913. Tax receipts for the 2009 budget year were available through June. They were compared to the same period last year. The budget year runs from October to September, meaning there will be three more months of receipts this year.
Posted by:Fred

#22  Wondering out loud how much of this is intentional - people going John Galt? Would like to think it's a big number.
Posted by: Iblis   2009-08-04 20:46  

#21  I cut the amount of money I usually have uncle sam take out every check - starve the beast.
Posted by: Hellfish   2009-08-04 20:17  

#20  2 more words: Hollow Economy.
Posted by: ed   2009-08-04 16:52  

#19  2 Words: Laffer Curve.
Posted by: Thraimp Hatfield2565   2009-08-04 16:44  

#18  I've been working a 30-hour week for months now (though occasionally I pick up more if a rush project pops up - especially if they need my particular expertise). I'm not complaining, though - at least I've still got a job (unlike others I know).

The gummint is getting less from each of my paychecks because I'm earning less, but I'll be paying the same in quarterly taxes (for my side business) until next April. Then, unless something improves, their total take from my pocket will drop drastically.

A friend of mine works for the State - she told me recently they're going to have an unpaid furlough day this year and next. At least it's just one day - so far. The State is letting people go, too.

I think federal AND state tax revenues are going to continue to go down. But we're not as bad off as we would be if the State 'Pubs hadn't refused to go along with the Dems and spend, spend, spend like they wanted to the last few years.

Pfui.
Posted by: Barbara Skolaut   2009-08-04 15:21  

#17  might be a good time to get rid of some stock I got rid of all mine 2 years, don't know where to turn now.
Posted by: Anguper Hupomosing9418   2009-08-04 15:06  

#16  So lots of people are surprised by the revenue drop. I'm not. Me and everyone in my office has been on a 32 hour work-week since last November. I have no idea how many more businesses are doing the same and then there is the huge rise in unemployment and businesses closing. Raising taxes will only make it worse.
Posted by: Deacon Blues   2009-08-04 13:38  

#15  Highly progressive tax rates are guaranteed to produce this result.

In addition to top earners making less, keep in mind that many are enjoying inflated salaries during the bubble -- former hair dressers are making $300k annually selling houses. Unlike people who are accustomed to having money, the former hair dresser has not taken any steps to shield her income from taxes. She gets hit at the highest possible rates and government tax coffers swell. The problem, of course, is that when the bubble bursts she goes back to cutting hair and government looses a huge source of revenue.

Exasperating this problem, government budgets based on all this new revenue during the bubble years. They spend as if revenues will continue, and continue to grow, forever. When the bubble bursts they don't cut spending, they just push the tax burden down to the middle class.

Rinse and repeat.
Posted by: Iblis   2009-08-04 12:35  

#14  might be a good time to get rid of some stock but the dollar will not be a good asset to put it in.... decisions decisions ....
Posted by: 3dc   2009-08-04 12:34  

#13  Ah. Thanks, Mike.

I'm not so sure it's actually lurking as just waiting idly for its cue, barely offstage....
Posted by: Barbara Skolaut   2009-08-04 12:02  

#12  Miss Barbara,

The week after the last week in September is the first week in October - the beginning of the fiscal year. 'Moose may suspect - as do I - that some very, very bad news is lurking down the pike.

Mike
Posted by: Mike Kozlowski   2009-08-04 11:55  

#11  Why the last week of September, 'moose? What's going on then?
Posted by: Barbara Skolaut   2009-08-04 11:26  

#10  In 2008, revenues were about $2.524T. The estimates for this year, almost a year old, of $2.0-2.1T are proving to be correct.

If there is a "Third Wave" downturn, anticipated in late 3rd quarter-4th quarter of this year, 2010 revenues may be down to $1.5-1.75T.

Also, once again, a warning that the last week of September could have a bank run, so please have cash on hand, at home in a safe place.
Posted by: Anonymoose   2009-08-04 11:06  

#9  I tend to look at it like this, every car turned in wipes my entire tax contribution for a year.
Posted by: swksvolFF   2009-08-04 10:46  

#8  #4 is sarcasm, yes? (English sometimes tone and diction escape me online)
Posted by: Lagom   2009-08-04 09:56  

#7  What happens when the government bubble bursts?
Posted by: Fred   2009-08-04 09:21  

#6  Well, when you rely upon the top 1 percent to carry as much as 95 percent, then when they take a hit, everyone takes a hit. The Donk solution is class warfare and redistribution, i.e. to kill the goose that lays the golden egg.
Posted by: Procopius2k   2009-08-04 06:56  

#5  All of this whilst Barry, his New York Amish inner cabal and the donks insist on spending huge additional amounts? Wake up soon America or we'll likely lose everything.
Posted by: Besoeker   2009-08-04 06:53  

#4  Such gloom and doom! $2 billion for clunkers is only $20 from each of 100 million taxpayers.

Or, if we can't raise taxes, like the One promised, then it'll be $100 from each of our children, or $1,000 from each of our grandchildren. Chump change.
Posted by: Bobby   2009-08-04 06:12  

#3  Time to roll back the public sector to what they are supposed to be - servants of the private sector, not rulers of the private sector.

They broke the social contract, they have to make things right with sacrifice.

Posted by: no mo uro   2009-08-04 05:37  

#2  The same thing is happening all over the developed world.

The only option is to rollback what governments do to the level of 30 or 40 years ago.

And BTW, the revenue problem is going to get an awful lot worse before it gets any better.
Posted by: phil_b   2009-08-04 02:30  

#1  And it's going to stay down for many years. Just deducting the maximum capital gains losses will will take the rest of their lives for many top 10% earning taxpayers (who pay 70% of income taxes).

When you foist the costs of government and income redistribution onto a small minority then expect the government to catch pneumonia when those taxpayers catch a cold. The 25 year wild ride is over. Get used to walking in the slow lane G-man.
Posted by: ed   2009-08-04 01:40  

00:00