Income Tax Reciepts Drop 44% in April

Once Upon a Time the Budget was Balanced, Now its an Impossibility

In 1995 the elected leaders in the House of Representatives balanced the budget for four consecutive years while lowering taxes, increasing defense spending and increasing spending on intelligence spending.  What was discovered by this process was that by cutting taxes economic growth occurred through increased revenues that assisted with balancing the budget.  Priorities were set to increase spending in key areas while reducing it in nonessential areas.  Additionally, they eliminated pork barrel spending all together for that four year period.

Consider the priorities of the Obama Administration 9000 pork barrel projects in the $3.7 trillion dollar 2009-10 budget.  Massive entitlement spending and government public works projects and at the same time increasing taxes.  The  result of higher taxes and an economy in recession is a decrease in Federal Government revenue.  This is exactly what is happening today due to the poor choices of the American people in selection of representatives to Washington that are concerned with socialist ideals instead of the long term economic well being of the American people.

IRS Tax Revenue Falls Along with Taxpayers’ Income

By John Waggoner, USA TODAY, Federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago – the biggest April drop since 1981, a study released Tuesday by the American Institute for Economic Research says.

When the economy slumps, so does tax revenue, and this recession has been no different, says Kerry Lynch, senior fellow at the AIER and author of the study. “It illustrates how severe the recession has been.”

For example, 6 million people lost jobs in the 12 months ended in April – and that means far fewer dollars from income taxes. Income tax revenue dropped 44% from a year ago.  “These are staggering numbers,” Lynch says. Big revenue losses mean that the U.S. budget deficit may be larger than predicted this year and in future years.

“It’s one of the drivers of the ongoing expansion of the federal budget deficit,” says John Lonski, chief economist for Moody’s Investors Service. The Congressional Budget Office projects a $1.7 trillion budget deficit for fiscal year 2009.

The other deficit driver is government spending, which, the AIER’s report says, is the main culprit for the federal budget deficit.

The White House thinks that tax revenue will increase in 2011, thanks in part to the stimulus package, says the report from AIER, an independent economic research institute. But it warns, “Even if that does happen, the administration also projects that government spending will be so much higher each year that large deficits will continue, and the national debt held by the public will double over the next 10 years.”

The government may have a hard time trimming spending to reduce the deficit when the recession ends. The 77 million Baby Boomers- those born in 1946 through 1964 – will start tapping their federal retirement benefits soon, which means increased government outlays for Social Security and Medicare.

“It will be doubly difficult for federal government to reduce expenditures and narrow the deficit as rapidly as they did following previous recessions,” Lonski says. At the end of the last major recession, in 1981, Boomers were in their 30s. Their incomes were expanding, as was their appetite for goods and services.

The Boomers now are in their 50s and 60s and unlikely to keep increasing incomes for long, which means that revenue from income taxes could flatten in the next few years. Also, Lonski says, they are more likely to save for retirement than spend – and consumer spending is a big driver of the economy.

“The American consumer led us out of previous recessions with some semblance of gusto,” Lonski says. “They’re too old to do it now.”

Actually, they are now taxed to death and their ancestors are faced with deficits that are not a government priority to resolve but an ideological attempt by the totalitarian administration now in power to enslave the public with debt so that they will be subservient to their over lords and elected liberal party masters.  With less revenue government must borrow and create more debt to fund its Marxist-fascist ideology eliminating freedom, liberty and the American way of life as we have known it.

Richard Fisher, president of the Dallas Federal Reserve Bank, an outspoken free-marketer and believer in the Schumpeterian process of “creative destruction”, has been running a fervent campaign to alert Americans to the “very big hole” in unfunded pension and health-care liabilities built up by a careless political class over the years. “We at the Dallas Fed believe the total is over $99 trillion,” he said in February.”This situation is of your own creation. When you berate your representatives or senators or presidents for the mess we are in, you are really berating yourself. You elect them,” he said.