Arthur J. Villasanta – Fourth Estate Contributor
Washington, DC, United States (4E) – American workers are now paying more income taxes to the federal government while tax payments by businesses are plunging toward record lows because of the Republican’s Tax Cut and Jobs Act of 2017.
Data from the U.S. Department of the Treasury for the first half of 2018 reveals that individual income tax receipts rose 8.1 percent to $915 billion. On the other hand, corporate income tax receipts fell 32.4 percent to $100 billion.
The sharp decline in corporate tax revenue and the obscene tax burden borne by ordinary American employees is largely a result of Tax Cut and Jobs Act Trump signed into law by Donald Trump in December 2017. The law slashed the top corporate rate from 35 percent to 21 percent.
Workers got tax cuts, but they were relatively modest compared to the massive windfall tht went to the business community. More than two thirds of households got a tax cut averaging about $2,200, according to the Tax Policy Center. On the flip side, taxes will rise for sic percent of households by an average of $2,800. The rest will see no change.
Corporate tax receipts have kept falling as a portion of all federal revenue, from 17 pervcent in 1970 to nine percent in 2017. This year (2018), corporate tax receipts represent just 5.6 percent of federal revenue, which is the smallest portion ever on an annualized basis.
It’s worthwhile to note the federal government’s fiscal year starts in October, so FY 2018 tax revenue will include three months without the Trump tax cuts and nine months with them. The 5.6 percent figure is just for the first six months of calendar year 2018, when the Trump tax cuts were fully in effect.
Last summer, the Congressional Budget Office (CBO) forecast that individual tax receipts would rise 9.5% percent in 2018 without any tax cuts. The smaller rise of 8.1 percent reflects the impact of the Trump tax cuts. Most workers didn’t see lower tax withholdings in their paychecks until March, at the earliest, which means the full effect of the tax cuts aren’t showing up in government revenue numbers.
The CBO expected corporate tax revenue to rise 4.5 percent this year without any tax cuts. The huge drop in corporate tax revenue, following the tax cuts, highlights why the tax law has become a political problem for Trump and his fellow Republicans.
The tax law is hugely unpopular. A Real Clear Politics average of polls 4shows that 3 percent of Americans disapprove of the tax cuts while just 36 percent approve of it. Americans in general feel the tax cuts too heavily favor businesses and the wealthy.
The new federal revenue numbers confirm their worst fears. The unpopularity of the tax cuts could lead voters away from Republicans in the upcoming midterm elections, and perhaps transform one or both houses of Congress to Democrats.
Trump’s tax cuts are also boosting big time Washington’s annual deficits, along with the national debt. CBO expects the gap between revenue and spending to soar by 21 percent this year to $804 billion. The deficit will exceed $1 trillion by 2020 and keep on growing until the decade of the 2020s.
“The federal government will certainly collect less revenue than it would have without the tax cut,” said economist Kyle Pomerlau of the nonprofit Tax Foundation. “Eventually, the government does need to pay its bills. We’re not on a sustainable path.”
Article – All Rights Reserved.
Provided by FeedSyndicate