Friday, July 13, 2018

GOP Tax Scam acting as predicted - corporates pay less, workers aren't better, and deficit blowing up

Another notable economic report released this week was the monthly statement from the U.S. Treasury, which gave us the latest clue about what the GOP’s Tax Scam was doing to Uncle Sam’s budget.

For the month, the budget numbers weren’t as bad as you might expect. The deficit in June 2018 was actually lower than the deficit in June 2017 ($74.9 billion vs $90.2 billion in June 2017). But it seems a bit misleading as June 2017 had spending of $428.9 billion, $37.8 billion more than last month and the most spent in any month in either 2017 or 2018.

But those figure also tell you that receipts were $22.4 billion lower than they were in June 2017, and since the GOP’s tax scam hit paychecks in February, revenues have been lower in 4 of the 5 months (only in April, which included most tax payments that were filed for the 2017 tax year, did we seen an increase).

The biggest reason why tax revenues are lower? A major drop in corporate taxes, which was down significantly for both June and the 2018 Fiscal Year.

US Corporate Income Taxes, June 2018 vs June 2017
June 2017 $57.4 billion
June 2018 $38.0 billion

FFY 2017 through June $223.3 billion
FFY 2018 through June $161.7 billion

And it’s not because corporate pre-tax profits are diving. In fact, they've jumped even before accounting for the tax cut (see Table 11).

Pre-tax corporate profits, US (annualized basis)
Q1 2017 $2.109 trillion
Q1 2018 $2.252 trillion (+6.8%)

Post-tax corporate profits
Q1 2017 $1.642 trillion
Q1 2018 $1.920 trillion (+16.9%)

But it sure isn’t trickling down, as year-over-year wage growth is no different than it was this time last year.

And of course, that number is before inflation, which has nearly doubled over the past year.

This decline in corporate taxes also means that income taxes are taking up a larger amount the money going to Washington.

Share of total tax revenues Through June

Individual income tax 47.8%
Payroll, tariffs and other taxes 43.2%
Corporate taxes 8.9%

Individual income tax 51.4%
Payroll, tariffs and other taxes 42.2%
Corporate taxes 6.4%

June also marked the ¾ pole for the Federal Fiscal Year, and that was what this national report chose to focus on.
The U.S. budget deficit widened by 16 percent to $607 billion three-quarters of the way through Donald Trump’s first full fiscal year as president, as spending accelerated faster than revenue.

The shortfall in the nine months through June was larger than the $523 billion gap in the same period of fiscal 2017, according to a report from the Treasury Department released Thursday. Revenue rose to $2.54 trillion in the period, up 1.3 percent from a year earlier. Spending rose 3.9 percent to $3.15 trillion.
But the deficit has jumped by 22% since the Piece of Shit tax bill became law. If that 22% increase holds for the last 3 months of Fiscal Year 2018, that would mean we’d run a deficit of a little over $174 billion in that time.

And if that’s true, then we end up at $781 billion. Which is basically what the Congressional Budget Office predicted while this Piece of Shit was being debated. And the deficit is projected to get higher for each of the next 4 years after that.

So the June Treasury statement gives another bit of evidence that the GOP Tax Scam is doing exactly what anyone with a brain said it would do - funnel more money to corporations, with the average worker ending up no better off, and the deficit is blowing up just like the experts in DC said it would.

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