April Revenue Shower: What Tax Cut?

I wrote a few days ago about the surge in tax revenues. In today's WSJ, there is a related article titled April Revenue Shower, here are some excerpts:

Here's the "surge" you aren't reading about: the continuing flood of tax revenue into the federal Treasury. Tax receipts for April were $70 billion above the same month in 2006, and April 24 marked the single biggest day of tax collections in U.S. history, at $48.7 billion, according to the latest Treasury report.

There's no denying that Americans are sending more money than ever to Washington: Revenues for the first seven months of fiscal 2007 are up 11.3 percent or $153 billion (see chart above).

This Beltway bonanza has helped to slash the projected federal budget deficit by more than half from the same point last year. Across the past three Aprils, federal red ink has sunk by nearly $300 billion. The deficit this year could tumble to $150 billion, or an economically trivial 1% of GDP.

This revenue boom certainly casts doubt on the political wails about tax loopholes for the rich: So far this year, the taxes paid on so-called nonwithheld income, which are dollars that don't come from normal wages and salaries, have climbed by nearly 30%. This is income largely derived from capital gains, dividends and other investment sources - that is, the tax rates that were cut in 2003.

Individual income taxes are also up by 17.5% (see chart above) -- a handsome fiscal dividend from rising wages and low unemployment.