You Don’t Know What You Know

Today’s Review & Outlook column in the Wall Street Journal reports: “CBO says in its latest monthly budget review that individual income-tax withholding and payroll tax receipts rose 5% in February from a year earlier, while income-tax refunds fell 13%. The year-over-year increase is important because we are now getting the comparative results for the time period in which tax reform has been fully implemented. Tax receipts from rising incomes appear to have offset lower receipts from the cut in tax rates and 100% business expensing. The February revenue rise outstripped even a 7.3% spending increase from a year earlier, so the deficit declined by $12 billion in the month.”

9 thoughts on “You Don’t Know What You Know

  1. This is good news, but I have a question: Are the rich paying more of their fair share, or is trickle down economics working?

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    1. Good news? Not really. This data is evidence for the claim that the Trump administration deliberately withheld too little from paychecks in 2018 (reducing incoming revenue) to disguise the true impact of the tax bill in an election year. The decrease in refunds going back to tax payers now is simply the result of that shell game. New IRS withholding instructions for 2019 are more in line with the new tax law and thus increasing revenues.

      https://www.adp.com/resources/articles-and-insights/articles/e/eow-irs-2019-form-w4-represents-major-changes-to-payroll.aspx

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      1. I believe the WSJ addressed your objection in the quotation I shared, where it says, “The year-over-year increase is important because we are now getting the comparative results for the time period in which tax reform has been fully implemented”

        But apart from that, do you seriously mean to argue that $12 billion in deficit reduction today is less than a good thing because next year will be different?

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        1. No, they didn’t. The year over year increase is artificial because of the way the Trump administration administered withholding in 2018. Deficits are soaring under this administration because the Trump tax cuts are the height of fiscal and economic incompetence. And, BTW, the timing of cash flows is not really “deficit reduction.”

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          1. You’re either missing the point, or willfully obscuring it. Comparing this year’s total deficit to last year’s, or next year’s is not the relevant story. February’s receipts to the Treasury reflect an actual deficit reduction of $12 billion that correlates clearly with the administration’s economic policies.

            You can spin it all you want as a glass half empty, but it remains a glass half full, plus $12 billion.

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          2. Again, you are confusing timing of ins and outs with actual deficit reduction. Leave it to Trumpists to talk about reducing deficits while, in fact, greatly increasing deficits.

            The Federal deficit for FY 2018 was : $779 billion
            The Federal deficit forecast for FY 2019 : $984 billion

            Are you really not able to understand that this $12 billion improvement for one month is nothing more than a timing difference? Trump’s tax and spending policies are significantly increasing the federal deficit and there is no end in sight . . .

            https://www.wsj.com/articles/trump-administration-proposes-4-4-trillion-budget-for-fiscal-2019-1518455590

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          3. Re: “Are you really not able to understand that this $12 billion improvement for one month is nothing more than a timing difference?

            I get that just fine. I’m saying your observation is unimportant because WSJ is pointing out something different.

            The February budget surplus is an actual event. In contrast the total annual deficit you envision is merely a projection. You are using events which haven’t happened yet to criticise an event which has, in fact, happened.

            Neither I nor WSJ have suggested the one-month surplus is part of a trend. Hence, your claim that it is a) part of a trend, and b) the trend is negative is superfluous to the story. To me, as stated, it is important that the February data point correlates cleanly with current policy. That will be useful to know in the future when we have more actual economic performance to evaluate.

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          4. If this blip caused by dishonest manipulation of IRS withholding schedules is not part of a trend then what is the point of bringing it up? The answer is, of course, to blow smoke and obscure the mess being made by Trump

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          5. I answered that already.I’m afraid you are the one blowing smoke, quite a feat since you are out of ammunition.

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