Stingray: Surprising Jump in Tax Revenues Is Curbing Deficit

July 11, 2006

Surprising Jump in Tax Revenues Is Curbing Deficit

by Michael McCullough at 3:12 PM

Surprising only to liberals, that is. From the New York Times:

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.

On Friday, the Congressional Budget Office reported that corporate tax receipts for the nine months ending in June hit $250 billion — nearly 26 percent higher than the same time last year — and that overall revenues were $206 billion higher than at this point in 2005.

Congressional analysts say the surprise windfall could shrink the deficit this year to $300 billion, from $318 billion in 2005 and an all-time high of $412 billion in 2004.

Republicans are already arguing that the revenue jump proves that their tax cuts, especially the 2003 tax cut on stock dividends, would spur the economy and ultimately increase revenues.

“The tax relief we delivered has helped unleash the entrepreneurial spirit of America and kept our economy the envy of the world,” President Bush said in his weekly radio address on Saturday.

Tax revenues from the wealthy are increasing? Hey, I thought that the tax cuts only helped the rich pay less taxes.

Kennedy made tax cuts and they spurred economic growth (although the JFK Museum here in Dallas doesn’t mention tax cuts and says that Kennedy merely instigated “deficit spending). Ronald Reagan made tax cuts and they worked to spur the economy. Margaret Thatcher instituted tax cuts and they spurred the economy. Bill Clinton raised taxes, but it coincided with the dot-com boom, which was based on nothing, and the economy began to crash in March of 2000 — 9 months before Bush took office. Bush promoted tax cuts, and — surprise, surprise — they’ve caused an economic boom.

Tax cuts spurring economic growth should be surprising in the same sense that hitting your head with a hammer hurts. Only dolts living in a fantasy land should think otherwise.

Can’t liberals ever admit that they’re wrong?

Technorati and del.icio.us tags...