Record tax receipts undermine case for higher taxes
With the global political class busy congratulating itself on negotiating a worldwide minimum corporate tax rate, recent U.S. corporate tax data shows the private sector is already pumping record amounts of cash into Uncle Sam’s coffers.
According to the Tax Foundation, the robust tax collections undermine the Democratic case for raising corporate taxes:
The Congressional Budget Office (CBO) now estimates that the federal government received $370 billion in corporate tax revenue over the past year (fiscal year 2021), matching the record high level from 2007. This is a 75 percent increase over the previous year’s total, reflecting a rebound in corporate profits and the broader economy.
This year’s robust corporate tax collections calls into question efforts by the administration and congressional Democrats to increase the corporate tax rate and raise other corporate taxes based on claims of relatively low tax collections following the Tax Cuts and Jobs Act (TCJA) in 2017. In fact, corporate tax collections this year are about 25 percent higher than the $297 billion collected in 2017, prior to passage of TCJA. Likewise, as a share of GDP, corporate tax collections are higher this year (1.63 percent) than in 2017 (1.52 percent).
Amazing what an economic recovery and the end of COVID-era lockdowns can do. – not to mention tax cuts that allowed the private sector to deploy its cash as it wanted to, not as politicians wished.
But that’s not all. The federal government is also reaping record taxes from American workers:
…the rebounding economy has boosted individual income tax collections to an all-time high of $2.052 trillion for the fiscal year. Payroll tax revenue came in at $1.308 trillion, close to last year’s total, and other receipts came in at $317 billion. In total, federal tax collections reached $4.047 trillion in fiscal year 2021, an all-time high in nominal terms.
As a share of GDP, total federal tax collections hit 17.8 percent this year, which is higher than almost any year (2015 is the exception) since the Bush tax cuts in 2001, and substantially higher than the 16.3 percent of GDP that was collected on average between the passage of the Bush tax cuts in 2001 and the TCJA in 2017.
And yet it’s not nearly enough to satisfy big government fans (in both major political parties) or pay for their ballooning budgets.