NCPA - National Center for Policy Analysis

As Tax Collections Slow, Budget Surplus Falls

June 21, 2001

The economic slowdown has reduced federal tax realizations in recent months, thereby reducing the budget surplus. This illustrates the folly of relying on long-range budget projections which extend out as much as 10 years, warn economic analysts.

  • A sharp drop-off in corporate-tax payments this month compared to a year ago is expected to reduce the official 2001 budget-surplus estimate by $15 billion -- and possibly by as much as $20 billion.
  • That comes on top of a $20 billion reduction last month because of a slowdown in corporate and personal tax collections from January through May.
  • The June 15 quarterly corporate-tax payment was off 26 percent from 2000 levels.
  • The surplus this year is expected to total $200 billion.

If the weakness continues into the new fiscal year which begins October 1, as some analysts expect, it could make an already tight budget picture considerably tighter.

Source: John D. McKinnon, "Tax Collections Fall Due to Slowdown, Cut Budget Surplus," Wall Street Journal, June 21, 2001.


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