The NY Times just posted this story with the following headline: Surprising Jump in Tax Revenues is Curbing Deficit. Now what's surprising to me is that the NYTimes would even print this. But don't worry they get their spin in.
Let's look at the article first. From the first two paragraphs:
WASHINGTON, July 8 An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.
On Tuesday, White House officials are expected to announce that the tax receipts will be about $250 billion above last year's levels and that the deficit will be about $100 billion less than what they projected six months ago. The rising tide in tax payments has been building for months, but the increased scale is surprising even seasoned budget analysts and making it easier for both the administration and Congress to finesse the big run-up in spending over the past year.
That's good. I will admit, we're not where we need to be at this point. Politicians on both sides of the aisle are quite adept at using taxpayer dollars to buy their way back into office. Talk about the perfect scheme! First, the government takes your money from you and then uses your money to "benefit" you so you'll elect the same guy back into office so he can vote to take more of your money. Does any of that make sense? But that's a different post.
But, with the good news lead-in out of the way, it doesn't take long for the NYTimes bias to kick in. Compare these excerpts:
Republicans are already arguing that the revenue jump proves that their tax cuts, especially the 2003 tax cut on stock dividends, would spur the economy and ultimately increase revenues.
Now, the second one:
Democrats and many independent budget analysts note that overall revenues have barely climbed back to the levels reached in 2000, and that the government has borrowed trillions of dollars against Social Security surpluses just as the first of the nation's baby boomers are nearing retirement.
Notice anything specific? The first excerpt reports on what Republicans are saying. The second one takes to a little editorializing. My first observation. So, according to the NYTimes, "many independent budget analysts" agree with the Democrats. But, in the first excerpt, the Republicans stand all by their lonesome. Hmmmm. Seems to me that the tax receipts would agree with the Republicans on this one. Surely the NYTimes could have mentioned a
minority of budget analysts that agree with the Republicans?
On to the next observation. Another excerpt:
One reason the run-up in taxes looks good is because the past five years looked so bad. Revenues are up, but they have lagged well behind economic growth.
Ok, a little business lesson for our NYTimes writer here. The business cycle is cyclical (duh). The fall into the Recession of 2000 didn't have anything to do with President Bush, or President Clinton for that matter.
This site here provides a listing of the general reasons for the Recession. Recessions have to run their courses. I reference you to
this site here for an excellent listing of recessions in the last several centuries.
The second sentence in the above excerpt is interesting, but an obvious attempt to downplay any benefit from increased revenues. Poor attempt. This one's too easy! The reason is simple. Tax revenues lag behind economic growth because the increases in tax revenue are a RESULT OF economic growth and are therefore collected AFTER the growth begins. I won't go into great detail about the legal practice of deferring income into a future tax year. Deferring any income (but usually capital gains from good stock market performance) into future years will delay the tax on that income. There's the lag. The writer of the article even provides this answer in an indirect way.
One reason for the increased volatility may be that, contrary to a popular assumption, a disproportionate share of income taxes is paid by wealthy households, and their incomes are based much more on the swings of the stock market than on wages and salaries. About one-third of all income taxes are paid by households in the top 1 percent of income earners, who make more than about $300,000 a year. Because those households also earn the overwhelming share of taxable investment income and executive bonuses, both their incomes and their tax liabilities swing sharply in bull and bear markets.
Now, how does this play into the NYTimes' general diatribe against upper classes and how they don't pay taxes. They just popped their own balloon. What are they thinking!?
I can understand the NYTimes' frustration here. Any good news for the economy is bad news for Democrats this year. Times have been tough at the NYTimes. They've published several things lately (i.e. SWIFT - funds transfer program to track terrorist funding, etc) which have drawn huge outcries from the Public about National Security.
One last contention with the NYTimes. In the article, the writer states:
Despite almost five years of economic growth, individual income taxes  the biggest component of federal tax revenues  have yet to reach the levels of 2000. Even with surging payments for investment profits and business income, individual tax payments in 2005 were only $972 billion  below the $1 trillion reached in 2000, even without adjusting for inflation.
That sounds like a serious problem doesn't it? But, let's look at ALL the data from those years - not just 2000. From
this site:
Year and amount of Individual Tax Revenues:- 1998 - $828,586
- 1999 - $879,480
- 2000 - $1,004,462
- 2001 - $994,339
- 2002 - $858,345
- 2003 - $793,699
- 2004 - $808,959
- 2005 - $893,704 (estimated)
- 2006 - $966,877 (estimated)
Very interesting. 2001 appears to be an anomoly when compared to the 2 years prior to it. Could it be that 2001 was the end of the "Dot Com Bubble"? It seems like any reasonable person could see that comparing revenues ONLY to 2001 when that year appears to fall outside the natural growth trend would be a little disingenuous.
Anyway, I am pleased to see the revenue growth. Nice try NYTimes.
Now Playing: "Always There" by
Slingshot 57Technorati: New York Times,
tax cuts,
Budget Deficit