Thursday, January 25, 2007

$133,000,000,000 Error

The Joint Committee on Taxation (JCT) originally predicted that the capital gains tax cut would "cost" the Federal Treasury $5.4 billion in fiscal years 2003-2006. Thus, the initial CBO forecast (January 2004) for capital gains revenue was $42 billion in 2003, $46 billion in 2004, $52 billion in 2005, and $57 billion in 2006.

In what could now be considered the worst forecast blunder in modern times, the CBO study released today reported that capital gains tax collections were actually $51 billion in 2003 (not $42B), $72 billion in 2004 (not $46B), $97 billion in 2005 (not $52B), and $110 billion in 2006 (not $57B). Tax collections in 2005 and 2006 were nearly double the initial forecast. Total forecast error = $133,000,000,000 ($133 billion).

The "tax cuts" on capital gains actually turned out to be "tax hikes."

Thanks to Dan Clifton,
read more here.


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