BUSH TAX CUTS STIMULATED THE ECONOMY
July 13, 2005
For the first time since President Bush took office, a leap in tax revenue is about to shrink the federal budget deficit this year, by nearly $100 billion, reports the New York Times.
White House officials plan to announce today that the deficit for the 2005 fiscal year, which ends in September, will be far smaller than the $427 billion they estimated in February. Bush plans to hail the improvement at a cabinet meeting and to cite it as validation of his argument that tax cuts would stimulate the economy and ultimately help pay for themselves, says the Times.
- Based on revenue and spending data through June, the budget deficit for the first nine months of the fiscal year was $251 billion, $76 billion lower than the $327 billion gap recorded at the corresponding point a year earlier.
- The Congressional Budget Office estimated last week that the deficit for the full fiscal year, which reached $412 billion in 2004, could be "significantly less than $350 billion, perhaps below $325 billion."
- The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004.
- Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well.
Most of the increase in individual tax receipts appears to have come from higher stock market gains and the business income of relatively wealthy taxpayers. The biggest jump was not from taxes withheld from salaries but from quarterly payments on investment gains and business earnings, which were up 20 percent this year.
Source: Edmund L. Andrews, "Sharp Increase in Tax Revenue Will Pare U.S. Deficit," July 13, 2005.
For text (subscription required):
Browse more articles on Tax and Spending Issues