Gaius
1
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.
Gaius
2
Here is the same chart since 1990 in case that helps.
Gaius
3
On a state-and-local level we are seeing much the same thing.
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The level of tax receipts coming in is not the problem.
The level of tax receipts coming in is not a problem at all.
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It would be short-sighted/crazy for the government to spend money based on some notion that they will keep getting this much money in the foreseeable future.
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That sharp decline at the end is a bad sign. It probably means there is some underlying problem in the underlying economy (But who knows? We have never fallen from such a high level before.)
I guess they will just print more money as usual! Higher tax receipts than ever and record deficits.
Also record high rents and homelessness. Food prices keep going up.
1 Like
Gaius
5
Well, as long as they treat the temporary excess like a temporary excess
then . . .
Wait, that’s what they’re doing right?
Right?
