The red line below shows federal tax receipts. (Data as per US BEA via the Fed)
The black line shows the (top of the) long term trend.
1
Tax receipts are not a problem.
Taxes are not too-low.
Whatever problems we face are not caused by “the government is not receiving enough tax dollars.”
See a problem? (Price of bananas, or high crime rates, or lousy music these days or, bad healthcare system whatever) It ain’t caused by lack-of-taxes. It is caused by something else.
2
It would be crazy to spend money based on some pie-in-the-sky idea that the money is going to keep rolling in to Washington. A sane approach to budgeting would be for Congress to assume tax receipts will (long-term) return to somewhere between the black line and the green line. We should budget accordingly.
3
That sharp decline at the end is a bad sign. It signals some kind of crash in the greater economy. We don’t know for sure because we have never had a decline from this level before.
Safe-bet. Almost certain — federal gov’t tax receipts will return to the normal range, somewhere between the green and black lines.
Likely bet (but who knows?) — The sudden sharp drop at the end means the economy is probably entering a recession, but we can’t be sure.
