The CBO said total receipts this year would be $ 4.8 trillion or 19.6 per cent of the country’s economy, the highest since 2000 when the Treasury Department swam the dot-com bubble.
This is a big reason for the agency to see the government budget deficit shrink to $ 1 trillion this year.
This assessment comes at a time when Democrats are working to revive their big-ticket “Compromise” projects In a plan that could impose $ 1 trillion in new taxes targeting corporations and the rich, Senate Majority Leader Chuck Schumer (DN.Y.) Sneaked in with Joe Munch (DW.Va.).
The CBO said the increase in revenue was due to rising inflation and a recovery from the corona virus infection.
The government is taxing the nominal wages that are rising due to inflation, even though most people’s wages are falling in line with rising prices.
After all, most tax code is coded for inflation and is incomplete. Adjustments are being made to things like the start of personal income tax brackets in August, so they exclude subsequent increases in inflation.
“The Internal Revenue Service sets changes to those income limits before the start of the tax year, i.e. based on inflation in the previous year,” the report says. “Because of that recession, a large share of income may be taxed at higher rates during high inflation.”
Taxes paid by individuals – the government’s largest source of revenue – are pushing for an increase, the CBO said, which is expected to rise to 28 percent this year. As a share of GDP, they have been very high since the creation of the personal income tax in 1913.
Capital gains are also rising, reflecting a run-up to last year in the stock market, which increased by $ 262 billion – 11.5 percent. This is up from a 25 per cent increase last year.
The combination of higher profits and the effects of inflation also boosts corporate tax payments, with the CBO now up 6 percent to $ 372 billion.
