Government Revenues Drop as Tax Cuts Kick In
Corporate tax receipts in June were 33 percent lower than a year ago, according to data released by the Treasury Department Thursday, as companies made smaller estimated payments due to the reduction in their tax rates. Total receipts were down 7 percent, while payroll taxes were 5 percent lower compared to June 2017.
“June receipts to US government were our first mostly-clear look at the revenue effects of the new tax law, with lots of estimated payments and little noise from the 2017 tax year,” The Wall Street Journal’s Richard Rubin tweeted Friday.
Surprisingly, the deficit was smaller in June compared to a year ago, narrowing to $74.86 billion from $90.23 billion last year. The drop was driven by a 9 percent reduction in government outlays that reflected accounting changes rather than any real changes in spending, Rubin said in the Journal.
“More broadly, the federal deficit is swelling as government spending outpaces revenues,” Rubin wrote. “The budget gap totaled $607.1 billion in the first nine months of the 2018 fiscal year, 16% larger than the same point a year earlier.”
Kyle Pomerleau of the Tax Foundation pointed out that the drop in corporate tax receipts is a permanent feature of the Republican tax cuts, tweeting: “Even in a Trump dream world in which these cuts paid for themselves, corporate tax collections would remain below baseline forever. It would be higher income and payroll receipts that made up the difference.”
Chart of the Day: Long Way to Go on Coronavirus Testing
The White House on Friday unveiled plans for a new effort to ramp up testing for Covid-19, which experts say is an essential part of limiting the spread of the virus. This chart from Vox gives a sense of just how far the U.S. has to go to catch up to other countries that are dealing with the pandemic, including South Korea, the leading virus screener with 3,692 tests per million people. The U.S., by comparison, has done about 23 tests per million people as of March 12.
After Spending $2 Billion, Air Force Bails Out on Planned Upgrades of B-2 Bombers
The Air Force has scrapped a planned upgrade of its B-2 stealth bomber fleet — even after spending $2 billion on the effort — because defense contractor Northrup Grumman didn’t have the necessary software expertise to complete the project on time and on budget, Bloomberg’s Anthony Capaccio reports, citing the Pentagon’s chief weapons buyer.
Ellen Lord, the undersecretary of defense for acquisition and sustainment, told reporters that the nearly $2 billion that had already been spent on the program wasn’t wasted because “we are still going to get upgraded electronic displays.”
Big Hurdle for Sanders’ Plan to Cancel Student Debt
Bernie Sanders wants to eliminate $1.6 trillion in student debt, to be paid for by a tax on financial transactions, but doing so won’t be easy, says Josh Mitchell of The Wall Street Journal.
The main problem for Sanders is that most Americans don’t support the plan, with 57% of respondents in a poll last fall saying they oppose the idea of canceling all student debt. And the politics are particularly thorny for Sanders as he prepares for a likely general election run, Mitchell says: “Among the strongest opponents are groups Democrats hope to peel away from President Trump: Rust Belt voters, independents, whites, men and voters in rural areas.”
Number of the Day: $7 Million
That’s how much Michael Bloomberg is spending per day in his pursuit of the Democratic presidential nomination, according to new monthly filings with the Federal Election Commission. “In January alone, Bloomberg dropped more than $220 million on his free-spending presidential campaign,” The Hill says. “That breaks down to about $7.1 million a day, $300,000 an hour or $5,000 per minute.”