Grab your wallet, IRS revenue plunges 34%

[PocketProtector]

http://www.usatoday.com/money/perfi/...nue-down_N.htm

IRS tax revenue falls along with taxpayers' income


By John Waggoner, USA TODAY
Federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago — the biggest April drop since 1981, a study released Tuesday by the American Institute for Economic Research says.

When the economy slumps, so does tax revenue, and this recession has been no different, says Kerry Lynch, senior fellow at the AIER and author of the study. "It illustrates how severe the recession has been."

For example, 6 million people lost jobs in the 12 months ended in April — and that means far fewer dollars from income taxes. Income tax revenue dropped 44% from a year ago.

"These are staggering numbers," Lynch says.

Big revenue losses mean that the U.S. budget deficit may be larger than predicted this year and in future years.
FIND MORE STORIES IN: Baby Boomer | Moody's

"It's one of the drivers of the ongoing expansion of the federal budget deficit," says John Lonski, chief economist for Moody's Investors Service. The Congressional Budget Office projects a $1.7 trillion budget deficit for fiscal year 2009.

The other deficit driver is government spending, which, the AIER's report says, is the main culprit for the federal budget deficit.

The White House thinks that tax revenue will increase in 2011, thanks in part to the stimulus package, says the report from AIER, an independent economic research institute. But it warns, "Even if that does happen, the administration also projects that government spending will be so much higher each year that large deficits will continue, and the national debt held by the public will double over the next 10 years."

The government may have a hard time trimming spending to reduce the deficit when the recession ends. The 77 million Baby Boomers— those born in 1946 through 1964 — will start tapping their federal retirement benefits soon, which means increased government outlays for Social Security and Medicare.

"It will be doubly difficult for federal government to reduce expenditures and narrow the deficit as rapidly as they did following previous recessions," Lonski says. At the end of the last major recession, in 1981, Boomers were in their 30s. Their incomes were expanding, as was their appetite for goods and services.

The Boomers now are in their 50s and 60s and unlikely to keep increasing incomes for long, which means that revenue from income taxes could flatten in the next few years. Also, Lonski says, they are more likely to save for retirement than spend — and consumer spending is a big driver of the economy.

"The American consumer led us out of previous recessions with some semblance of gusto," Lonski says. "They're too old to do it now."
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[God's Country]

I'm not worried I make less than 100k/year,

[ALS]

Lets see unemployment went from say 5.5% to 8.9% and revenue drops 34%

I'm no Einstein but does something sound fishy here? 3.4% of the working population loses their jobs over the last year and revenue dumps 34%.

Anyone want to bet the unemployment rate is a whole lot worse than they are reporting.

[Eugene V. Debs]

Lets see unemployment went from say 5.5% to 8.9% and revenue drops 34%

I'm no Einstein but does something sound fishy here? 3.4% of the working population loses their jobs over the last year and revenue dumps 34%.

Anyone want to bet the unemployment rate is a whole lot worse than they are reporting.

Yeah, Guns4Fun started a thread in the Lounge on that very topic: http://forum.pafoa.org/lounge-108/60...heyre-not.html

[pyld]

Anyone want to bet the unemployment rate is a whole lot worse than they are reporting.

It almost always is. Let's say you lost a job making 80k/year and found something making $30k to keep the lights on. You don't count as "unemployed," despite the fact that your ability to spend disposable income just dropped and the amount of tax you pay just dropped and ......

This is common and has been a problem during every modern recession. Nobody has figured out a good method to measure "underemployment."

If the rate was 8.6% or thereabouts in April, figure somewhere north of 12% as the "real" number....

[Paradigm]

This is common and has been a problem during every modern recession. Nobody has figured out a good method to measure "underemployment."

And don't forget those who don't get raises...or even take a pay cut to keep the job. It may not be a lot of money per person, but when you multiply it by a few million workers, it gets scary.

Without the extra cash, I know I'm spending less. And I doubt I'm the only one.

[H.E. Pennypacker]

Lets see unemployment went from say 5.5% to 8.9% and revenue drops 34%

I'm no Einstein but does something sound fishy here? 3.4% of the working population loses their jobs over the last year and revenue dumps 34%.

Anyone want to bet the unemployment rate is a whole lot worse than they are reporting.

Even so, look at who is losing jobs - the evil Wall Streeters. They're vilified for the money they make, but nearly half of their paychecks go to taxes. In addition, any large, profitable corporation based in the U.S. pays nearly 40% (or more!) of their income in taxes to the feds and the states in which they operate. Corporations contribute far more tax revenue than individual citizens. These companies are either losing money or are far less profitable than they were last year. Now that 'loopholes' are going to be 'enforced,' look for more businsesses to give the big 'fuck you' to the USA and set up shop overseas - one reason the companies would stay here with the insane corporate tax rates is because they could use these 'loopholes' and save some money. Now? Shit, why bother with the USA at all?

These politicians need to figure out which issue is more important - tax revenue or capping pay/profits. You can't raise the former by implementing the latter!

/stepping off my soapbox now

[Tequila Sunrise]

Lets see unemployment went from say 5.5% to 8.9% and revenue drops 34%

I'm no Einstein but does something sound fishy here? 3.4% of the working population loses their jobs over the last year and revenue dumps 34%.

Anyone want to bet the unemployment rate is a whole lot worse than they are reporting.

Of course it is. When they calculate the unemployment they only count people who are eligable to collect for one, and self-employed can't collect, sub- contractors can't collect and so on. Those numbers are never counted.
The less you make, the less you pay, thus IRS incoming money DOWN. I actually got back money from workers comp. ins. because my payroll numbers were down from last year.

[Dredly]

lets not forget you don't pay taxes on loses and there are a lot of companies losing millions a day when they were making millions a day just 2 years ago.

Lets also not forget that the gov't is waiving taxes on a certain portion of unemployment benefits and extending unemployment benefits.

The way the gov't calculates unemployment is really funny.

If you are employed at any level - you are not unemployed

If you are not LOOKING for a job - you are not unemployed

Basically unemployed means you do not have a job, are looking for one and are collecting benefits, over 18 and under 65.

Oh and its just a SURVEY that they base the number off of

http://www.bls.gov/cps/cps_htgm.htm

[PA Rifleman]

Another revenue leak is more people are trading or bartering, which is outside the aegis of the IRS, et al. This has been a headache for the IRS for a while, but it only worsened with the economic downturn.