The End of the Supply-Side Tax Boom
Here are key full-month figures from Uncle Sam’s Daily Treasury Statement for January 31, compared to the January 2007 statement (in millions):
The decline in withholdings is illusory, and occurred only because January 2008 had four high-collection Mondays, while January 2007 had five.
But the message from the stagnation in the net amount of corporate income taxes, non-withhelds, and refunds is this: The engine of entrepreneurship is currently on idle.
The Monthly Treasury Statement released yesterday showed January tax receipts declining by 2.1% from a year ago:
Both the January and year-to-date results tell us that the dramatic supply-side driven increases in tax collections driven by the 2003 Bush tax cuts (44% in the four years ended September 30, 2007) are almost definitely over.
Outlays, relative to the previous fiscal year, have increased by a percentage that is unsustainable.
I anticipate having a column up at Pajamas Media tomorrow that elaborates on this, and what Washington should (and isn’t) doing about it.
Check out the article on the AT http://www.americanthinker.com/2008/02/a_budget_valentine.html excellent links to US budget and past.
SS, and other social spending is going to drown us, those SS receipts are drying up. 2017 here we come!
Be careful on evaluating the military budget figures for 2008 & 9 they incorporated all the supplimental requests whereas before they didn’t. If you are going to compare the military budget to 2003 to 2007, you have to add in the supplimentals for those years. Yes the GWOT is expensive, but what to do?
Comment by dscott — February 13, 2008 @ 8:55 am
#1, that is well done.
The pressure really starts mounting now, as the annual Soc Sec surplus being generated declines year after year. In the next 8-9 years, that surplus, which has been used to support other spending will decline by an average of about $25 billion a year, before going negative in 2017 or so, as you indicated.
What to do? If you’re Pelosi channeling Code Pink, you surrender.
Comment by TBlumer — February 13, 2008 @ 9:16 am
The multiplier effect of the tiny tax rate cuts of 2003 has run its course, but it has been hastened by “The Democrat Effect” that has taken hold since 2005, and is now in full swing.
Comment by Joe C. — February 13, 2008 @ 2:42 pm