The latest monthly budget report from the Congressional Budget Office shows the deficit for first eight months of fiscal year 2012 was just a bit smaller than same period last year.
But revenues coming in to the Treasury continue to go up in a healthy way: a 28.5% increase in personal income tax revenues, compared to the same period last year.
One conclusion: even as debate rages in Washington over raising income tax rates and eliminating tax breaks, the federal government is seeing strong revenue growth -- with no increase in income tax rates and no elimination of tax breaks.
In fact, the tax package President Obama signed into law last December extended a variety of tax breaks and cut taxes by $374 billion for this calendar year.
But tempering the good news on revenue growth, here’s some perspective: While personal income tax revenues were up in the first eight months of FY 2012, they are still below where they were three years ago, before the recession fully hit.
So far this fiscal year, income tax revenues are at $702 billion, according to the CBO report. But in the same period back in fiscal year 2008, they stood at $769 billion.
Total revenues – including corporate tax, individual income tax, and Medicare and Social Security taxes -- are still 11 percent below where they were at the same point in fiscal year 2008. (The federal government’s fiscal year runs from October 1 to the following September 30, so FY 2008 began in October 2007.)
Meanwhile, when CBO adjusts for special factors like prepayments of deposit insurance by banks, spending is up only one percent overall so far in the current fiscal year.
Worryingly, as in previous months, the fastest growing item of spending is interest payments on the debt – and that’s even with today’s extraordinarily low interest rates.
How much more revenue could be gained if just half of today’s unemployed were working?
A back-of-the-envelope estimate: If 7 million more people were working, and assuming each paid an average of $7,500 in federal taxes this year, that would be another $52.5 billion in annual revenue.