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| Economy |
| The great tax drought of 2009 |
| 2009-10-08 |
| (CNNMoney.com) -- You don't need a Ph.D in economics to know that the government fiscal year that ended last week was ugly for the budget. Much attention has been paid this year to the record-high spending and deficit accrued because of the financial and economic crisis. But one of the driving factors that has gotten less notice: plummeting tax revenue. The crisis, after all, walloped company profits and savaged Americans' income stream. Through the end of August, Uncle Sam collected 25% less in tax revenue for the year than he did during the same period a year earlier. The two biggest culprits -- a 56% drop in corporate income tax revenue and a 20% drop in individual income tax revenue. On balance, the Congressional Budget Office expects that tax receipts will be 14.9% of gross domestic product this year, well below the historical 18.3%average. While revenue forecasts for next year are better, the CBO estimates tax receipts will only make up about 15.7% of GDP. But two factors could lower that estimate. The first is whether or not the projections for economic growth and the unemployment rate prove too optimistic. If they do, that would reduce how much tax revenue Washington collects. The other factor is whether or not lawmakers pass a host of tax-break extensions that are under discussion. Some of those breaks are safety-net provisions that were part of the economic recovery act passed in February, while others come from a bevy of provisions that typically get extended every year. Possible contenders for extension that could further reduce revenue include:
But their cost might be offset somewhat by other tax measures. For instance, roughly $10 billion could be raised if lawmakers, as expected, retain the estate tax for 2010, said Dan Clifton, the head of policy research at Strategas Research Partners. On the other hand, should lawmakers cook up any new tax breaks during 2010 in the name of stimulus or job creation or any other issue, that could further compromise revenue collections, unless lawmakers stick to their promise to pay for any new tax cuts. |
| Posted by:Fred |
| #4 If you think consumers don't pay for tariffs then you're very mistaken. |
| Posted by: Bright Pebbles 2009-10-08 06:50 |
| #3 There was a time many decades ago when most of the government's income was obtained from tariffs on imports, aka 'external revenue' 'Internal revenue' was an innovation which is now thought of as government's sole support. |
| Posted by: Anguper Hupomosing9418 2009-10-08 02:38 |
| #2 No more stock market and real estate bubble profits to tax. Lot's of taxpayers will be maxing out their capital losses deduction for the next 30 years. |
| Posted by: ed 2009-10-08 01:14 |
| #1 Any takers on the idea that the cash society is just now getting revved up? Off the books action is alive and well throughout the country. |
| Posted by: USN, Ret. 2009-10-08 00:41 |