A View of U.S. Economy from Corporate Tax Revenue

By Russ Winter 

There has been much ado about the US employment numbers both from surveys and the BLS.  Most of this centers around bogus numbers from the BLS, but I prefer to jump to the quick, and look at withholding taxes. Really what difference does it make if there are few hundred thousand new jobs if they are part time, pay low wages, and have no benefits.

The bottom line comes from stepping back and looking through the lens of the last four months, using the government fiscal year to date (October to now) , which incorporates XMAS hiring.  Lee Adler noted a surge in January which is now fading.  In using this data in the past, anytime you get something spiky it will usually have to do with YoY timing or an outlier.  Charles Biderman at Trim Tabs sees nothing here. The four month wages withheld data shows very little improvement either, which to me casts serious doubt at least on the quality of any job improvement.

Per the Daily Treasury Statement, so far in the current fiscal year total withholding is 618.5 bn vs 616.7 bn YoY, hardly an employment boom. Corporate taxes collected are 74.5 bn vs 68.9 bn.  If you are wondering how corporations do so well, their tax  level is scrapping along the lowest to GDP in forty years. It seems that an” unexpected” $100 billion hole has appeared in corporate tax revenues caused by the aforementioned bonus equipment depreciation. [NYT]   If we have such a great economy wouldn’t be nice if taxes picked up a few degrees?  Instead total taxes collected fiscal year to date is 726.6 bn vs 715.0 bn YoY, about a 1 1/2% increase. 

Still the CBO is still looking for a 14.7% increase in revenue, due any time from outer space apparently. Unless the payroll tax cut is dropped, at this run rate federal tax revenue is going to fall far short of the lofty projection for FY 2012.

About The Author - Russ Winter is a veteran investor, financial writer, world traveler, and he blogs at Winter Watch.  (EconMatters author archive here)

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

© EconMatters All Rights Reserved | Facebook | Twitter | Post Alert | Kindle