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Federal Deficit Up 16 Percent Following Tax Reform

Posted on Friday, 13th July 2018 @ 05:13 PM by Text Size A | A | A

Reprinted with permission from TheNewAmerican.com.

In the first nine months of the present fiscal year (from October 2017 through June 2018), total revenues (gross receipts) to the federal government were $2.54 trillion, while total government spending was $3.15 trillion, leaving a gap — a deficit — of $607 billion. That’s 16-percent higher than it was at the same time a year ago.

But when just the first six months of 2018 are considered (Trump’s tax reform was effective January 1 and began to be felt by the government in February), revenues from personal income taxes rose by $76 billion compared to a year earlier, a nine-percent jump. When corporate tax revenues over the same period are considered, total gross receipts to the government were up $31 billion, a rounding error compared to total revenues.

Some were overjoyed. Investor’s Business Daily editorialized “Is Trump Tax Cut Paying for Itself?” CNS News was less ebullient: “Feds Collect Record Individual Income Taxes Through June; Still Run $607B Deficit.”

In April, the Congressional Budget Office, running its receipts and expenses computer model, projected that annual federal deficits will move from the present $600 billion deficit to over $1 trillion no later than 2020, two years from now.

What’s the true picture here? Can Trump’s tax cuts pay for themselves? Or are the Democrats’ claims that they will “bust a hole” in the federal budget in the out years valid?

Read More…

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