FactCheck.org’s Eugene Kiely explored how to think about the impact of 2017’s Tax Cuts and Jobs Act (TCJA) on tax revenue through official measures of tax receipts. Treasury reports show that in 2018 tax receipts were slightly lower than in 2017. However, tax receipts in February 2019 were 10% higher than in February 2018. Kiely asked PWBM’s Alexander Arnon what these figures mean for future tax receipts.
Arnon warned against over-emphasizing any single month’s receipts, telling FactCheck: “There’s a lot of noise in month-to-month receipts so we don’t put much weight on any of these movements, especially since relatively little is collected in February compared with other months anyway… As to why relatively little is collected in February, it’s mostly about the timing of business tax payments (corporate taxes and individual income taxes on pass-through businesses),” Arnon said. “Businesses make payments based on their estimated tax liability roughly once per quarter: in January, April, June, and September.”
The Committee for a Responsible Federal Budget agreed that it’s wiser to look at annual rather than monthly receipts. PWBM analyzed the budgetary effects of the TCJA on 2018 and future years. We find that this Act lowers revenue and increases debt by between $1.9 trillion to $2.2 trillion over the next decade. The Congressional Budget Office agrees that tax receipts are lower as a result of the tax cuts.