October 16, 2018/Press Release

ICYMI: Budget Deficit Jumps Nearly 17% Despite Tax Bill Promises

COLUMBIA, Mo. — According to a new report from the New York Times, the federal budget “swelled to $779 billion” despite promises that the Administration’s tax cuts would “pay for themselves.” The New York Times writes that “as a direct consequence of the tax law signed last year” “corporate tax revenues have fallen by a third” — and the revenue from the President’s reckless trade war has failed to make up the difference.

As a reminder, Josh Hawley has been a vocal supporter of the Republican tax plan. And he continues to support the Administration’s trade war, which has already cost Missouri hundreds of jobs and millions of dollars in economic activity. The Administration’s newest wave of tariffs puts industries in every single Missouri county at risk.

From New York Times:

The federal budget deficit swelled to $779 billion in fiscal year 2018, the Treasury Department said on Monday, driven in large part by a sharp decline in corporate tax revenues after the Trump tax cuts took effect.

The deficit rose nearly 17 percent year over year, from $666 billion in 2017. It is now on pace to top $1 trillion a year before the next presidential election, according to forecasts from the Trump administration and outside analysts. The deficit for the 2018 fiscal year, which ended Sept. 30, was the largest since 2012, when the economy and federal revenues were still recovering from the depths of the recession.

[…]

The big revenue drop came on the business side. Corporate tax revenues have fallen by a third from a comparable period a year ago, a direct consequence of the tax law signed last year, which reduced the top corporate rate to 21 percent from 35 percent.

For the full 2018 fiscal year, corporate tax receipts were nearly $205 billion. That figure is a drop from $297 billion in fiscal year 2017.

The 2018 numbers do not reflect a full year of effects from the Trump tax cuts, which also included cuts for individuals and owners of so-called pass-through corporations. Most of the new law’s provisions took effect in January.

Many Republicans, including Mr. Mnuchin, said during last year’s debate over tax policy that the proposed cuts would pay for themselves by producing faster economic growth and correspondingly higher federal revenues. Outside analysts disagreed. The Joint Committee on Taxation, the official tax scorekeeper of Congress, projected that the law would reduce revenues by $1 trillion, even when accounting for additional growth.

One area of increased revenue came from Mr. Trump’s tariffs, which he has imposed on foreign steel and aluminum and $250 billion worth of Chinese imports. While the tariffs have not begun to generate enough revenue to help pay down the national debt, as Mr. Trump has promised, they brought in about $41.3 billion in 2018. That was up from about $34.6 billion in 2017, an increase of nearly 20 percent.