...from an article in the New York Times.
Tax collections are rising steeply, and for many economists, unexpectedly.
Why? Because of taxes paid by corporations and other big winners. The gains in tax revenues are eating away at the budget deficit - even in wartime.
Experts say this year's tax receipts should come in about $250 billion higher this year than last, and the deficit should be $100 billion smaller than projected just six months ago.
"The main reason is a big surge in corporate tax receipts, which have nearly tripled since 2003, as well as what appears to be a big rise in individual taxes on stock market profits and executive bonuses." (From the article.)
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As the Laffer Curve predicted long ago, cutting tax rates produces greater tax revenues. People have a greater incentive to invest if Uncle Sam doesn't get as big a cut of their money. Taxes in general, as economists have long known, are a brake on the economy. Want less of something? Just tax it.
The 2003 tax cuts on corporate dividends had the effect of releasing the brakes on the economy. Other factors have undoubtedly contributed to the upsurge in the economy, but lower tax rates certainly have to be among the most influential. (From Democrat-Gazette article)
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What does Thomas Kahn, staff director for the Democrats on the House Budget Committee, have to say about this good news?
"The fact is that revenues are way below what the administration said they would be a few years ago. The long-term pronosis is still very, very bleak, and the administration doesn't have any kind of long-term plan." ( New York Times)
As the Democrat-Gazette article stated: "Every silver lining has a black cloud."
