Federal Tax Revenue Remains Strong, According to the CBO

Adam N. MichelThe Congressional Budget Office (CBO) released an update to itsbudget and economic projections, reflecting changing economic conditions and new legislation.The report shows that U.S. federal revenues are projected to remain at or above historic levels. In 2022, revenues reached a  two‐​decade high of 19.6 percent of gross domestic product (GDP). At a time of historically high revenues, it should be clear to policymakers that uncontrolled spending is the primary culprit for persistent deficits and debt.The strong revenue growth —both in recent years and projected—does not support claims by some that the 2017 Tax Cuts and Jobs Act caused the current budget imbalance. Instead, Figure 1 shows that corporate revenues declined only temporarily in the year following the tax cuts, but income and payroll taxes increased. In t he following years, revenues continued to grow with the economy as businesses expanded and workersreceived wage increases. In 2022, income tax revenue was 32 percent higher than CBO projected following the 2017 tax cuts, inApril 2018. Similarly, payroll and corporate tax revenue outpaced the estimate by 6  percent and 20 percent, respectively.The nominal revenue numbers clearly show the effects of inflation and other pandemic impacts, as income taxes spiked in 2021 and 2022. But not all the increase is a  mirage. Figure 2 shows revenues are currently well above the historic average when shown as a percent of GDP, which also increases ...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs