Monday, March 12, 2018

GOP tax cuts from DC are already causing revenues to drop

Another big report out today is the monthly US Treasury Statement. We typically see some interest with this report anyway, since it has the revenues, outlays, and deficit/surplus for the previous month, as well as the fiscal year to date.

But this report warrants extra attention because it was the first month where the new federal tax cuts were in effect for withholdings, meaning that fewer funds were being sent out of people’s paychecks to DC. February is also the first month we start to see tax refunds get returned, and with many people rushing to pay property taxes at the end of 2017 and using other deductions that might not apply to them next year, we also could see if that has an effect.

And yes, the effects of the tax cuts definitely showed up.
Individual income tax withheld
Feb 2017 $116.61 billion
Feb 2018 $110.67 billion (-5.1%)

Net individual income tax
Feb 2017 $61.25 billion
Feb 2018 $45.39 billion (-25.9%)

Net corporate income taxes
Feb 2017 +$2.48 billion
Feb 2018 -$1.99 billion (-180.2%)
(yes, we actually gave out more in refunds to corporations than they paid in last month)

Total receipts
Feb 2017 $171.71 billion
Feb 2018 $155.62 billion (-9.4%)

Deficit for month
Feb 2017 $192.04 billion
Feb 2018 $215.25 billion (+12.1%)

Now, the Trump Admin and other supply-side hacks claim the growth that’ll come from those higher take-home pay amounts will eventually offset these lower receipts. But let’s see if those higher growth levels and revenues are actually happening in the coming months. Because if the deficit is going to blow up past the $832.6 billion the Trump Admin is already projecting, it’ll be evident very soon.

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