http://www.msn.com/en-us/money/mark...cit-to-dollar1-trillion/ar-BBL2AIM?li=BBnb7Kz
I am sure you guys will call this fake news even when the final numbers come in. Trumpers will say its all a lie. Tax receipts are up, not down. Trump signed a spending bill that slashed spending instead of dramatically increasing spending. There is no doubt this will all be lied about and rationalized away. Annual deficits over a billion dollars will be just dandy because they are Trump's deficits.
How the Trump tax cut is helping to push the federal deficit to $1 trillion
In the trough of the Great Recession in 2009, as companies laid off hundreds of thousands of workers each month, the amount of corporate income taxes collected by the federal government plunged by almost a third. It was the largest quarterly drop since the Commerce Department began compiling the data in the 1940s. No other period came close.
Until this year.
In the first half of 2018, corporate tax collections dropped to historically low levels as a share of the economy, according to data from the Bureau of Economic Analysis. That is pushing up the federal budget deficit much faster than economists had predicted.
The reason is President Trump’s tax cuts. The new law introduced a standard corporate rate of 21 percent, down from a high of 35 percent, and allowed companies to immediately deduct many new investments. As companies operate with a lower tax burden and a greater ability to offset what they owe, the federal government is receiving far less revenue than it would have under the previous tax system.
The growing deficit has forced the Trump administration to adjust its claim that the tax cuts would pay for themselves by generating increased revenue from faster economic growth. The White House’s Office of Management and Budget said this month that it had revised its forecasts from earlier this year to account for nearly $1 trillion of additional debt over the next decade — almost $100 billion a year in additional deficits, on average.
That is hindering the government’s ability to stabilize its balance sheet before the next recession hits or maintain spending programs that could help blunt the pain of future downturns. Economists equate that process to refilling the city water tower during periods of heavy rain, in order to prepare for the next drought. It’s not happening this time around.
So what’s going on?
The deficit is rising as billions in new spending compound the effects of tax cuts
The United States’ annual budget deficit is expected to top $1 trillion as early as the 2019 fiscal year, with the Congressional Budget Office’s baseline forecasts showing the annual deficit rising to $1.5 trillion over the next 10 years.
Adding to the deficit are hundreds of billions of dollars of federal spending increases, which Congress passed and Mr. Trump signed this year.
Corporate tax collections are down by a third from last year
From January to June, corporate tax receipts were nearly $50 billion behind — or down by close to a third — where they were a year ago.
“If we hadn’t changed our tax system,” said Kimberly A. Clausing, an economics professor at Reed College in Portland, Ore., who studies business taxation, “you would be expecting rising revenues.”
Corporate collections are running 20 percent below initial forecasts from the Congressional Budget Office and 10 percent below predictions from the Penn Wharton Budget Model, a nonpartisan research initiative that forecast large deficits as a result of the tax law.
Administration officials dismissed those outside estimates when the bill was being debated, but their own estimates now show something similar: an annual deficit that tops $1 trillion from 2019 through 2021, and falls from there only because of large proposed spending cuts that the administration has spent little effort on and that Congress has taken no steps to pass.
Companies are bringing back money held abroad, but are spreading out the tax bill over time
Corporate profits after taxes are higher than they have ever been in the United States (though still below their peak as a share of the economy, which was reached under President Barack Obama).
White House officials say the new law, which changed how the United States taxes multinational companies that operate here, is spurring a wave of so-called repatriation — companies returning money to the United States that they had booked on their balance sheets abroad in order to defer American taxes.
In the first quarter of this year, according to Commerce Department data, multinationals repatriated $306 billion, in the form of dividends. That was $270 billion above the average quarterly amount over the last five years. White House officials say that’s a sign that the tax law is working.
Over time, that repatriation should generate tax revenue.
But, as Ms. Clausing noted, companies can spread the bill over the next eight years, which is why we’re not seeing that money lifting corporate tax payments in the near term. The law forces multinational companies to pay a one-time tax on cash and assets held abroad, but the Internal Revenue Service allows firms to pay that bill in annual installments, even if they choose to pay out the money in dividends right away.
Companies may take advantage of a provision to write off new investments
Some analysts believe the so-called expensing provisions of the new tax law, which allow companies to write off new investments immediately, could prove more popular than some forecasters anticipated. To take advantage of the provision, companies may write off investments in software or machinery or new buildings.
If that’s true, “it means the government will lose more revenue than we all originally thought, especially in the short run,” said Kyle Pomerleau, an economist with the Tax Foundation in Washington, which forecast a large boost to economic growth from tax cuts and the expensing provision.
Multinationals could also be shifting money — on paper, basically — into the United States solely to take advantage of the expensing provision and reduce their American tax bills. It’s also possible, but far too soon to tell, that changes to multinational taxation, including what is considered a de facto minimum tax on certain income earned overseas, will not raise as much revenue as expected.
In those cases, the outcome could be a boon for multinationals, and a larger-than-expected blow to the Treasury.
I am sure you guys will call this fake news even when the final numbers come in. Trumpers will say its all a lie. Tax receipts are up, not down. Trump signed a spending bill that slashed spending instead of dramatically increasing spending. There is no doubt this will all be lied about and rationalized away. Annual deficits over a billion dollars will be just dandy because they are Trump's deficits.
How the Trump tax cut is helping to push the federal deficit to $1 trillion
In the trough of the Great Recession in 2009, as companies laid off hundreds of thousands of workers each month, the amount of corporate income taxes collected by the federal government plunged by almost a third. It was the largest quarterly drop since the Commerce Department began compiling the data in the 1940s. No other period came close.
Until this year.
In the first half of 2018, corporate tax collections dropped to historically low levels as a share of the economy, according to data from the Bureau of Economic Analysis. That is pushing up the federal budget deficit much faster than economists had predicted.
The reason is President Trump’s tax cuts. The new law introduced a standard corporate rate of 21 percent, down from a high of 35 percent, and allowed companies to immediately deduct many new investments. As companies operate with a lower tax burden and a greater ability to offset what they owe, the federal government is receiving far less revenue than it would have under the previous tax system.
The growing deficit has forced the Trump administration to adjust its claim that the tax cuts would pay for themselves by generating increased revenue from faster economic growth. The White House’s Office of Management and Budget said this month that it had revised its forecasts from earlier this year to account for nearly $1 trillion of additional debt over the next decade — almost $100 billion a year in additional deficits, on average.
That is hindering the government’s ability to stabilize its balance sheet before the next recession hits or maintain spending programs that could help blunt the pain of future downturns. Economists equate that process to refilling the city water tower during periods of heavy rain, in order to prepare for the next drought. It’s not happening this time around.
So what’s going on?
The deficit is rising as billions in new spending compound the effects of tax cuts
The United States’ annual budget deficit is expected to top $1 trillion as early as the 2019 fiscal year, with the Congressional Budget Office’s baseline forecasts showing the annual deficit rising to $1.5 trillion over the next 10 years.
Adding to the deficit are hundreds of billions of dollars of federal spending increases, which Congress passed and Mr. Trump signed this year.
Corporate tax collections are down by a third from last year
From January to June, corporate tax receipts were nearly $50 billion behind — or down by close to a third — where they were a year ago.
“If we hadn’t changed our tax system,” said Kimberly A. Clausing, an economics professor at Reed College in Portland, Ore., who studies business taxation, “you would be expecting rising revenues.”
Corporate collections are running 20 percent below initial forecasts from the Congressional Budget Office and 10 percent below predictions from the Penn Wharton Budget Model, a nonpartisan research initiative that forecast large deficits as a result of the tax law.
Administration officials dismissed those outside estimates when the bill was being debated, but their own estimates now show something similar: an annual deficit that tops $1 trillion from 2019 through 2021, and falls from there only because of large proposed spending cuts that the administration has spent little effort on and that Congress has taken no steps to pass.
Companies are bringing back money held abroad, but are spreading out the tax bill over time
Corporate profits after taxes are higher than they have ever been in the United States (though still below their peak as a share of the economy, which was reached under President Barack Obama).
White House officials say the new law, which changed how the United States taxes multinational companies that operate here, is spurring a wave of so-called repatriation — companies returning money to the United States that they had booked on their balance sheets abroad in order to defer American taxes.
In the first quarter of this year, according to Commerce Department data, multinationals repatriated $306 billion, in the form of dividends. That was $270 billion above the average quarterly amount over the last five years. White House officials say that’s a sign that the tax law is working.
Over time, that repatriation should generate tax revenue.
But, as Ms. Clausing noted, companies can spread the bill over the next eight years, which is why we’re not seeing that money lifting corporate tax payments in the near term. The law forces multinational companies to pay a one-time tax on cash and assets held abroad, but the Internal Revenue Service allows firms to pay that bill in annual installments, even if they choose to pay out the money in dividends right away.
Companies may take advantage of a provision to write off new investments
Some analysts believe the so-called expensing provisions of the new tax law, which allow companies to write off new investments immediately, could prove more popular than some forecasters anticipated. To take advantage of the provision, companies may write off investments in software or machinery or new buildings.
If that’s true, “it means the government will lose more revenue than we all originally thought, especially in the short run,” said Kyle Pomerleau, an economist with the Tax Foundation in Washington, which forecast a large boost to economic growth from tax cuts and the expensing provision.
Multinationals could also be shifting money — on paper, basically — into the United States solely to take advantage of the expensing provision and reduce their American tax bills. It’s also possible, but far too soon to tell, that changes to multinational taxation, including what is considered a de facto minimum tax on certain income earned overseas, will not raise as much revenue as expected.
In those cases, the outcome could be a boon for multinationals, and a larger-than-expected blow to the Treasury.
