Federal Tax Revenues Rising: +28.5% for Individuals
Treasury's Monthly Budget Review was released today, and the chart above shows that individual income tax collections through the first eight months of the fiscal year 2011 (October 2010 to May 2011) increased by 28.5% and $156 billion, compared to last year. Corporate income tax receipts increased by 4.8% and overall tax revenues increased by 10.3%. For the month of May, federal tax receipts increased by $28 billion and 19% compared to last year, and about half of that increase was due to higher income and payroll taxes withheld, due at least partly to an increase in total wages and salaries this year.
Now if the federal government could just get the spending part under control....
21 Comments:
Federal spending might come "under control" in about 20 to 40 years when the present generation of entitled retiring Baby Boomers finally passes on. The generation behind us already knows that they cannot collect, so they are less willing to contribute. However, the numbers are against them at the polls. For now.
In the mean time, the Austrian alternative would be to tend your own garden.
Leaving campus, waiting for a bus, I saw a sign at a pizza shop: MEDIUM 1 TOPPING $899. I knew they needed a decimal point; but clearly, it is only a matter of time before that pizza is $899 and the average worker makes $1400 per hour and gold is $150,000 per ounce. The history of the Turkish lira and Italian lira, and the Japanese yen, show that the zeroes do not matter as long as people accept the scrip.
What does matter, of course, is long-term savings which contra Keynes, is exactly the same as long term investment. Inflation destroys that for any savings (investment) in that denomination.
Therefore, the next generation will also have to adapt to more sophisticated media such as Exchange Traded Funds, rather than thinking of passbooks and certificates of deposit. And there is always gold ... or we could go long on pizza futures...(:-)
How can individual returns be up that much when there are fewer people working?
Because they cashed out their 401k, paid the 10% federal theft penalty and paid income taxes in a higher tax bracket...at least that is how my taxes were (more than) 28.5% higher than last year. It wasn't additional income or increased wages.
Boy, them Corporations are sure kicking in, huh. Whassat? 5.7% of Total? Wow. Go gett'em, boys.
I repeat, I don't care if you lower Corporate Taxes to 10%. Just make them "Payable, Now."
We're tying up Trillions of Dollars, Overseas. It's not the "taxes;" it the Loss of "Investment."
Eric,
That is something I would have never thought of. I wonder how prevalent it is...I'm sure it feels pretty damn prevalent to you.
@Eric H
This is exactly what's going on. A measure of people working is the collections for Social Insurance. That is down 5%.
"I repeat, I don't care if you lower Corporate Taxes to 10%. Just make them "Payable, Now.""
How about lowering them to 0%?
"We're tying up Trillions of Dollars, Overseas. It's not the "taxes;" it the Loss of "Investment.""
Who is "we"? I don't have any trillions overseas, and I doubt that you do either. Why are you using that collective "we"?
Yay! More money for the government!
It looks like the "Effective" Corporate Tax Rate is around 7.5%.
Not bad, huh?
This is another very intersting post by Prof. Perry. Thank you to the Professor.
Because they cashed out their 401k, paid the 10% federal theft penalty and paid income taxes in a higher tax bracket...at least that is how my taxes were (more than) 28.5% higher than last year.
Well, now we have two anecdotes, or, if you prefer, data points. My experience is the same. We're spending our capital just as the Austrians predict.
Note regarding the comment on "corporate taxes"...the amount does not include sub-chapter S corporations as the income is passed through to the owner and is paid at the individual tax rate. All regular "C" corporations with the exception of large publicly held firms take all of the profit and expense it out as bonuses to the primary stock holders and employees/401K's etc..it would be stupid to do otherwise. The result of this action is that the Corp pays very little if any tax. If this action is not taken you will be paying taxes TWICE. Regarding the fact that tax revenues went up despite the number of unemployed..a very large percentage of this group is in the -0- or small tax bracket. I have paid a total of over $500,000 in each of the last two years in federal taxes alone...final note. I sold my business...just not enough return for the risk..the U.S Government/laws are not pro business and if they are not changed quickly these negative results will continue and the standard of living for us and our
children will stay on the path to ruin. Just look around...government is growing and the producers/risk takers are being taxed to death.
end statement from tom:
"final note. I sold my business...just not enough return for the risk..the U.S Government/laws are not pro business and if they are not changed quickly these negative results will continue and the standard of living for us and our
children will stay on the path to ruin. Just look around...government is growing and the producers/risk takers are being taxed to death."
YIKES. Thanks tom, for informing us and for running a business, which is usually an endless series of solving problems that arise; and hoping to have some return in the end. I hope it ended well for all the effort you put in.
Michael E Marotta: "The generation behind us already knows that they cannot collect, so they are less willing to contribute."
With respect to Social Security, those who so believe are mistaken.
Social Security is a bad deal - no question about it. Most workers would be far better off if their 12.4% had been used to purchase private disability insurance and to invest in a private retirement account.
Social security can continue indefinitely to pay all retirees a large part - perhaps 75% - of what they were promised. Note that 75% of what Generation X has been promised is almost as much in real dollars as current retirees receive.
"How can individual returns be up that much when there are fewer people working?"
there are not fewer people working.
employed civ labor force was 139,779K in may 2011 vs 139,353 in 2010.
granted, it's only a 426k increase (0.3%), but it is an increase.
i think the real reason we are seeing increased collection is threefold:
1. incomes are up in nominal terms (though not in real terms, but this has no effect on nominal taxes)
2. people have run out of loss carryforwards from 2008-9 and are now recognizing gains from a huge stock rally.
3. tax rates are in in a number of places, new taxes have been imposed.
the reasons this is a poor metric for economic measurement are simple:
this is a much more volatile series that is heavily affected by the stock market. thus, it's % changes are wildly accentuated and not really comparable to economic activity in terms of magnitude.
sensitivity to past losses makes it more complex still. this metric is showing more growth now than in 2009 despite much lower (and deteriorating) economic growth. it's just a question of loss carryforwards.
to make things worse, it cannot tell inflation from growth.
consider a year with 10% inflation and 8% taxes growth. 8% would look great, but in reality it would imply a significant loss of real income even if income increase = tax increase.
rufus-
"It looks like the "Effective" Corporate Tax Rate is around 7.5%."
no. not at all. this has been explained to you over and over. at this point i can only assume your repeated ignorance is willful.
most of the corporate income increases have come from mark to market on investment driven by the ludicrous interest rate policies of the fed.
mark to market counts as income according to GAAP, but it IS NOT TAXABLE. if you own apple and it goes from 100 to 200, you have made money. if you were a corporation, you would record it as "other income". but you pay no taxes until you sell just as you pay no taxes on home appreciation etc.
the income figures you are using have little to do with taxable income. the average tax rate for the S+P 500 is 26%. you are only getting to this silly 7% number by making an apples to oranges comparison.
further, taxes are not paid (in actual cash) linearly by corporations.
also, don't forget that half the social insurance tax is paid by corporations. there's another 20% for you. now they are paying 25% of taxes.
Rufus' comment is Exhibit A as to why we are sliding into the socialist abyss.
The sad part is when the inevitable government breaking point happens, people like Rufus will continue to blame the "rich" and "multinational corporations" for not paying their fair share.
They will not blame the real culprits, government bureaucrats who promised cradle to grave government programs that we simply cannot afford.
Morganovich,
You're right, I should have said virtually flat. To be honest, all the fiddling everybody tries to do with the employment data just leaves me guessing where the facts lie.
#2 on your list seems to be a logical factor. I'm really taking an educated (term used loosely) guess, but if the rate of nominal income growth is over a couple % points, I'd be surprised.
Also, I know I have had very little, or no, changes in my personal taxes from y-y....is there a significant-enough change somewhere, or were you just throwing that in because it made 'some' difference?
How can individual returns be up that much when there are fewer people working?
Easy. Last year many individuals wrote down their losses and wound up paying very little. This year those write-downs are gone and they have to pay more in taxes. It also helps to have more capital gains revenue as people take profits off the table after a huge run in prices.
Ya, VangeIV, Morganovich made that point too.
They ran a story on CBS that would back up Eric's theory as well.
"no. not at all. this has been explained to you over and over. at this point i can only assume your repeated ignorance is willful."
Thanks, Morg, for giving Dufus, er uh Rufus the "what for".
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