Surprising Jump in Tax Revenues Curbs U.S. Deficit (NYT)

[Omaha Steve]

W will be saying I TOLD YOU SO THROUGH Nov.

Full 2 page story: http://www.nytimes.com/2006/07/09/washington/09econ.html?ex=1153022400&en=1990b8203dea1bdc&ei=5043&partner=EXCITE

Surprising Jump in Tax Revenues Curbs U.S. Deficit

By EDMUND L. ANDREWS
Published: July 9, 2006

WASHINGTON, July 8 — An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.

On Tuesday, White House officials are expected to announce that the tax receipts will be about $250 billion above last year's levels and that the deficit will be about $100 billion less than what they projected six months ago. The rising tide in tax payments has been building for months, but the increased scale is surprising even seasoned budget analysts and making it easier for both the administration and Congress to finesse the big run-up in spending over the past year.

Tax revenues are climbing twice as fast as the administration predicted in February, so fast that the budget deficit could actually decline this year.

The main reason is a big spike in corporate tax receipts, which have nearly tripled since 2003, as well as what appears to be a big rise in individual taxes on stock market profits and executive bonuses.

[Demeter]

1. Not Very Impressive In the Face Of Multi-Trillion Deficits

especially from the tax cuts. And the high unemployment, rising poverty, dropping coverage of health insurance, disappearing pensions,.....

[MissWaverly]

2. must be all those oil profits, up, up and up

well, I thought I had given them a lot of tax breaks, guess, I didn't give them enough. heh, heh,
heh.

[daleo]

6. Probably just moving some of next years revenues into this year

I don't know how exactly, but my guess is a bookkeeping adjustment is behind this, and it is a one shot wonder for the upcoming elections.

Here's a clue:
"The surge could also evaporate as quickly as it appeared. Over the past decade, tax revenues have become much more volatile, alternately soaring and plunging in the wake of swings in the stock market and repeatedly defying government projections."

It sounds like a preemptive excuse for after the election, when these same revenues will mysteriously drop.

"And federal debt has ballooned to $8.3 trillion, up from $5.6 trillion when Mr. Bush took office."

The deficit is still somewhere between 300 and 400 billion. New Orleans is still a disaster, and the Iraq war is still bleeding $10 billion a month or more.

[MissWaverly]

8. agree, they're really good at juggling numbers

we saw that in 2004 in the vote tally from the machines

[Rex]

3. So they funnel a little bit of the 2 trillion Rummy lost at the Pentagon

on 9/10. BFD. This shit is so warped and dark...money is the root of all evil.

[xchrom]

4. well if too much bull shit is good news then this is good news.

[Roland99]

5. Company profits are running at the highest rate in 22 years.

Even with the drop in corporate tax rates, all those profits are getting taxed and it *is* helping federal coffers. But, it's not helping consumers' wallets.

Thanks to TahitiNut from this thread:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=364&topic_id=1589783&mesg_id=1591109


http://members.aol.com/tahitinut/MyCharts.htm

Check out charts #3, #5, #7, and #8.

[applegrove]

7. And really - who gets to buy the best new stocks? The rich. What

about middle class mom & pop? Are they stuck with the old stocks? Cause a market is a market. Asymetrical information and all.

[Frustratedlady]

9. Haliburton paid their taxes, eh?

I'm afraid it's too little, too late. Not many will believe any reports coming out of this administration, after they've fudged the numbers on so many other reports. Yawn time.

[tanyev]

10. Smoke and mirrors. Remember the repatriation of foreign income.

The $104 Billion Refund
The most absurd corporate tax giveaway of 2005.
By Michelle Leder
Posted Thursday, April 13, 2006, at 12:33 PM ET
Feeling flush because you're getting a nice tax refund this year? You're not alone. Some of America's largest corporations—a virtual who's who of the Fortune 100—have been reporting their own hefty tax windfalls, thanks to an absurd provision of a law designed to create jobs.

IBM, for example, is banking a $2.8 billion refund—well, better to call it a "tax savings"—because instead of paying the normal corporate tax rate of 35 percent on $9.5 billion in profits it earned overseas, the company paid only 5.25 percent. That's the magic of the American Jobs Creation Act, a piece of legislation that passed with comfortable margins in both the House and the Senate and was signed into law by President Bush just two weeks before the 2004 elections.

The AJCA, which was pushed through during the last fit of panic about outsourcing, was ostensibly designed to encourage companies to add jobs here. It gave a small tax deduction to American manufacturers, and it offered a one-time tax holiday in 2005 when corporations could repatriate their foreign income at a massively reduced tax rate. This repatriation, the theory went, would encourage R & D and capital investment in the United States, leading to new positions down the road. But, like President Bush's creatively named Clear Skies initiative and Healthy Forest Restoration Act, the American Jobs Creation Act has not lived up to its title.
http://img.slate.com/id/2139782/?nav=navoa

[NYC]

11. Everyone should read Tanyev's post.

The one directly above this. Very informative.

[AirAmFan]

13. So the "unexpected $100 billion deficit reduction" is just the expiration of

a "one-time" giveaway to corporations last year? A $104 billion giveaway enacted just 2 weeks before the 2004 election?

Then the deficit well may go up by MORE than $100 billion right AFTER the election in November. Nothing says "thank you" to big corporations for their generosity in campaign bribes than a rebate plan, right at the end of campaign "fundraising".

Did the Times article really fail to mention the "American Jobs Creation Act". Tsk, tsk... how far "journalism" has slipped.

[Vidar]

14. Excellent analysis.

[1932]

18. I'd love to see a breakdown -- not just net revenues, but an indication

of effective rates paid by the people whom the Times claims are contributing so much.

I bet it is something like this: corps repatriated much more income at a rate 1/7th of the normal rates which boosted tax revenues this year, but this year alone, and that money will never get taxed again at reasonable rates.

[trapper914]

34. kick

kick for post #10

[anotherdrew]

12. they've jumped by 3X because they decided not to dodge them n/t

[Tempest]

20. The Repugs gave them amnesty on overseas profits

It's a one time jump, nothing more.

[SoCalDem]

15. Yummm.. Buttery guns ...or just cooked numerals?.. n/t

[modrepub]

16. How the hell is this good news?

We're still spending more than we're collecting. Oh, it's just not as much. Silly me, what's a few trillion in new debt and billions more in interest among friends. We all know who the party of fiscal responsibility is, right?

[Toots]

17. Shouldn't we end those taxes so even more will come in????

:crazy: Right we believe you...Honest...

[MGKrebs]

19. OK. Tax revenue is up. But wagaes are down and prices are up and

it doesn't look like jobs are being created. So giant corporations are paying more taxes on their gigantic profits, but actual people aren't seeing any of the benefit.
How long will it be before corporations find/are given another tax break.

edit: Meant to add one of TahitiNuts' charts:

[NVMojo]

21. Surprising Jump in Tax Revenues Is Curbing Deficit

WASHINGTON, July 8 — An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.


On Tuesday, White House officials are expected to announce that the tax receipts will be about $250 billion above last year's levels and that the deficit will be about $100 billion less than what they projected six months ago. The rising tide in tax payments has been building for months, but the increased scale is surprising even seasoned budget analysts and making it easier for both the administration and Congress to finesse the big run-up in spending over the past year.

Tax revenues are climbing twice as fast as the administration predicted in February, so fast that the budget deficit could actually decline this year.

The main reason is a big spike in corporate tax receipts, which have nearly tripled since 2003, as well as what appears to be a big increase in individual taxes on stock market profits and executive bonuses.

more...

http://www.nytimes.com/2006/07/09/washington/09econ.html?_r=1&th&emc=th&oref=slogin

[onehandle]

22. This Bullshit Headline Paid For by Karl Rove. nt

[rusty charly]

23. "no one could have predicted..."

why is EVERYTHING such a "surprise" with this crowd?

[NVMojo]

24. ...and buried in the middle of the article, page 2 ...

"The long-term outlook is such a deep well of sorrow that I can't get much happiness out of this year," said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and a former White House economist under President Bush.

[Tellurian]

26. SOURCE: CONGRESSIONAL BUDGET OFFICE.. whopper time!!!

The CBO also said each and every taxpayer will receive a $10k refund every year for the next 50 yrs!

Even though China is funding the Iraq war for us.

[StClone]

28. RIght on, reading the rest of the story

Gee, that is why we have to borrow billions from the rest of the planet not to mention our trade imbalance and more.

I still think DU should have a professional Economist on-staff to sort this stuff out.

[rzemanfl]

25. They do this bullshit all the time. Not impressed. Fool me once

shame on you, fool me..duh, uh, hmmm, duh...you can't fool me again.

[applegrove]

27. Looks like tax revenues are going down again. Seems * needs another

big dump into the stock market to keep wealth growing (and making it seem like tax revenues are going up). Dump of social security funds into the markets didn't pan out. End of taxes on estates doesn't look like it will pass this year. What will they do? What will they do?

[Peace Patriot]

29. Such utter crap! Like "trade secret" voting counting.

I love the buried part that NVMojo dug out, above, from PAGE TWO(!)...

It bears repeating...

"The long-term outlook is such a deep well of sorrow that I can't get much happiness out of this year."
--Douglas Holtz-Eakin, former director of the Congressional Budget Office, former White House economist under President Bush

[Tempest]

30. Revenues still not where they were in 2000

The jump is a recent event.

The article says revenues are still down from fiscal year 2000.

Also, there's the one-time tax amnesty Congress passed that came into play at the start of the fiscal year that has to be taken into consideration.

[Tandalayo_Scheisskopf]

31. This is a result...

Of the one-time deal with corporations who had cash held overseas, to repatriate the money, pay a much-reduced tax on it and face no penalties.

Voodoo economics strike again.

[DuaneBidoux]

32. Does this include Iraq spending (in deficit numbers)?

[54anickel]

33. They said nearly the same thing last year - and let's not forget the

Jobs Destruction Act and the fact that the AMT is hitting more and more people each year (since they won't bother to address it).

From May of 2005:

Tax Receipts Exceed Treasury Predictions
Early Surge Lowers Deficit Projections

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/04/AR2005050402134.html

snip>

The Treasury Department this week reported there would be a $54 billion swing from projected deficit to surplus in the April-to-June quarter, after an unanticipated gush of tax payments poured into the Treasury before the April 15 deadline. That prompted private forecasters to lower their deficit projections for the fiscal year that ends in September.

Budget analysts inside and outside the government said the positive turn is likely to be short-lived. Indeed, after a four-year absence, the Treasury Department announced yesterday it is considering reissuing its 30-year Treasury bond to help finance long-term government debt, jolting the bond markets and pushing down the price of existing 30-year securities.

But in the short term, many forecasters said the budget deficit appears to have crested.

"I think it has turned the corner," said David Wyss, chief economist at Standard & Poor's, the credit rating agency. "My guess is 2004 will have been the worst year."

For that fiscal year, the government recorded a $412 billion deficit, the largest ever in nominal dollar terms, although not as large as some of the deficits of the 1980s when measured against the size of the economy. The 2004 mark was up from 2003's $378 billion deficit, which topped 2002's $158 billion deficit.

snip>

One factor should help in the short term: Seven months into the fiscal year, Congress is only now passing the $82 billion emergency war spending bill for fiscal 2005, which means that much of the money will be spent in 2006. That should reduce the 2005 deficit while bringing down war costs next year. Wyss said the deficit should continue to fall in 2006 and 2007.

more...

[LeftHander]

35. NYT taking heat from RW....Bends over....greases up.....

CHRIST!

Are we that FUCKING STUPID?!