Taxing logic

So, we’ve gotten some good economic news lately. Unemployment is down to the level it was at 9/11, and new numbers yesterday are just as positive:

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.

Those tax cuts for the rich? Yeah, they worked.

But this is the NYT reporting, so read the rest of the article for all the doom and gloom that might be down the road for us. After all, tax cuts just don’t make sense. Maybe by the end of the article you’ll be convinced that it’s best if the government just keeps taking more of your money.

One thought on “Taxing logic”

  1. Being an accountant, I can say that compared to last tax season, many of our clients had higher dividends than in the prior year which would explain the higher tax revenue from quarterly payments. If anyone owned Microsoft stock in November, you might remember receiving $3 per share owned.

    Some of our clients have owned their MSFT stock from almost the begining and many had over 10,000 shares. So, $30,000 in extra income @ the nice new capital gains rate for dividends (15%) is an extra $4,500 in tax paid this year. MSFT paid out a total of $30B that’s an extra $4.5B to Uncle Sam for you non-math types. Also, I’m pretty sure dividends were higher from oil companies as well. The reduced tax on dividends has caused a lot of corporations to pay out more dividends and therefore causing more tax revenue. I’ll have to read the rest of the article later.

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