While the Congressional Budget Office is holding to its forecast for a reduced U.S. federal budget deficit this year, the CBO has had to boost its estimate from the forecast made in April, according to Tax.com. Why? The increase stems mostly from lower-than-anticipated receipts from corporate income taxes.
To be sure, the CBO expects that the deficit for this year will hit $506 billion, about $170 billion lower than it was in 2013, according to the global tax website’s account. But that’s bigger than the $492 billion CBO projected in April, with the increase stemming mostly a drop in revenues of about $26 billion modified by a decline in expenses of about $11 billion.
The CBO reportedly expects the federal budget’s total revenues, currently at $3 trillion, to rise by about 8% this fiscal year as compared to FY2013, according to tax.com, sparked especially by a 15% surge in corporate income taxes. Individual income taxes should rise by an estimated 6% and payroll taxes by 8%.
“Increases in wages and salaries and changes in laws – such as those affecting payroll tax rates and income tax deductions for investments in business equipment – largely account for the higher tax receipts,” the website reported. For example, Congress failed to extend a sunsetting measure last year enabling companies to take 50% bonus depreciation on equipment purchases.
At 2.9 percent of gross domestic product (GDP), the CBO points out that this year’s deficit would be much smaller than those of recent years (which reached almost 10 percent of GDP in 2009). However, federal debt would reach 74 percent of GDP at the end of this fiscal year – more than twice what it was at the end of 2007 (before the latest recession).
In fact, the CBO notes that persistent fiscal deficits during its long-term projections until 2024, would raise the federal debt to GDP ratio even higher. Although, according to its updated projections, the annual deficit would remain at less than 3 percent of GDP until 2018, and grow thereafter to reach nearly 4 percent by 2022, those persistent deficits would mean that debt would reach 77 percent of GDP in 2024.
Revenues, at some USD3 trillion, are expected to increase by about 8 percent in FY2014, compared to FY2013. Revenues from all major sources should rise this year, including individual income taxes (by an estimated 6 percent); payroll taxes (by 8 percent); and corporate income taxes (by 15 percent). Increases in wages and salaries and changes in laws – such as those affecting payroll tax rates and income tax deductions for investments in business equipment – largely account for the higher tax receipts.
The CBO is, however, also seeing some effects being caused by uncertainties within the corporate tax system, and, in particular, the congressional debate on whether to extend, in full or in part, the “tax extenders” (the 50 tax measures that expired at the end of 2013).
For example, on the basis of tax collections until July, the CBO expects receipts of corporate income taxes in FY2014 to be USD37bn less than the amount the agency projected in April, largely due to a revised assessment of the timing of businesses’ tax payments following the expiration at the end of December 2013 of increased provisions allowing them to immediately deduct 50 percent of their investments in equipment (one of the tax extenders). The CBO now expects that firms will also delay more payments from 2014 to 2015.
In fact, it has been estimated elsewhere that reviving the tax extenders continually over the next 10 years would cost about USD700bn, and would, obviously, seriously affect the CBO’s revenue projections for FY2014 and beyond, which have to be predicated on existing, rather than future projected, tax law.
– See more at: http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html?utm_source=davidkatz@cfo.com&utm_medium=email&utm_content=Click%20URL%20http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html&utm_campaign=Tax-News+%20Friday,%20August%2029,%202014#sthash.tgkhzjMK.dpuf
ased on its economic forecast, which anticipates that the economy will grow slowly this year, the CBO anticipates that the federal budget deficit for fiscal year (FY) 2014, under current law, will amount to USD506bn, around USD170bn lower than the shortfall recorded in FY2013. That deficit is wider than the USD492bn it projected in April, with its estimate of revenues dropping by USD26bn and expected expenditure declining by USD11bn billion.
At 2.9 percent of gross domestic product (GDP), the CBO points out that this year’s deficit would be much smaller than those of recent years (which reached almost 10 percent of GDP in 2009). However, federal debt would reach 74 percent of GDP at the end of this fiscal year – more than twice what it was at the end of 2007 (before the latest recession).
In fact, the CBO notes that persistent fiscal deficits during its long-term projections until 2024, would raise the federal debt to GDP ratio even higher. Although, according to its updated projections, the annual deficit would remain at less than 3 percent of GDP until 2018, and grow thereafter to reach nearly 4 percent by 2022, those persistent deficits would mean that debt would reach 77 percent of GDP in 2024.
Revenues, at some USD3 trillion, are expected to increase by about 8 percent in FY2014, compared to FY2013. Revenues from all major sources should rise this year, including individual income taxes (by an estimated 6 percent); payroll taxes (by 8 percent); and corporate income taxes (by 15 percent). Increases in wages and salaries and changes in laws – such as those affecting payroll tax rates and income tax deductions for investments in business equipment – largely account for the higher tax receipts.
The CBO is, however, also seeing some effects being caused by uncertainties within the corporate tax system, and, in particular, the congressional debate on whether to extend, in full or in part, the “tax extenders” (the 50 tax measures that expired at the end of 2013).
For example, on the basis of tax collections until July, the CBO expects receipts of corporate income taxes in FY2014 to be USD37bn less than the amount the agency projected in April, largely due to a revised assessment of the timing of businesses’ tax payments following the expiration at the end of December 2013 of increased provisions allowing them to immediately deduct 50 percent of their investments in equipment (one of the tax extenders). The CBO now expects that firms will also delay more payments from 2014 to 2015.
In fact, it has been estimated elsewhere that reviving the tax extenders continually over the next 10 years would cost about USD700bn, and would, obviously, seriously affect the CBO’s revenue projections for FY2014 and beyond, which have to be predicated on existing, rather than future projected, tax law.
– See more at: http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html?utm_source=davidkatz@cfo.com&utm_medium=email&utm_content=Click%20URL%20http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html&utm_campaign=Tax-News+%20Friday,%20August%2029,%202014#sthash.tgkhzjMK.dpuf
ased on its economic forecast, which anticipates that the economy will grow slowly this year, the CBO anticipates that the federal budget deficit for fiscal year (FY) 2014, under current law, will amount to USD506bn, around USD170bn lower than the shortfall recorded in FY2013. That deficit is wider than the USD492bn it projected in April, with its estimate of revenues dropping by USD26bn and expected expenditure declining by USD11bn billion.
At 2.9 percent of gross domestic product (GDP), the CBO points out that this year’s deficit would be much smaller than those of recent years (which reached almost 10 percent of GDP in 2009). However, federal debt would reach 74 percent of GDP at the end of this fiscal year – more than twice what it was at the end of 2007 (before the latest recession).
In fact, the CBO notes that persistent fiscal deficits during its long-term projections until 2024, would raise the federal debt to GDP ratio even higher. Although, according to its updated projections, the annual deficit would remain at less than 3 percent of GDP until 2018, and grow thereafter to reach nearly 4 percent by 2022, those persistent deficits would mean that debt would reach 77 percent of GDP in 2024.
Revenues, at some USD3 trillion, are expected to increase by about 8 percent in FY2014, compared to FY2013. Revenues from all major sources should rise this year, including individual income taxes (by an estimated 6 percent); payroll taxes (by 8 percent); and corporate income taxes (by 15 percent). Increases in wages and salaries and changes in laws – such as those affecting payroll tax rates and income tax deductions for investments in business equipment – largely account for the higher tax receipts.
The CBO is, however, also seeing some effects being caused by uncertainties within the corporate tax system, and, in particular, the congressional debate on whether to extend, in full or in part, the “tax extenders” (the 50 tax measures that expired at the end of 2013).
For example, on the basis of tax collections until July, the CBO expects receipts of corporate income taxes in FY2014 to be USD37bn less than the amount the agency projected in April, largely due to a revised assessment of the timing of businesses’ tax payments following the expiration at the end of December 2013 of increased provisions allowing them to immediately deduct 50 percent of their investments in equipment (one of the tax extenders). The CBO now expects that firms will also delay more payments from 2014 to 2015.
In fact, it has been estimated elsewhere that reviving the tax extenders continually over the next 10 years would cost about USD700bn, and would, obviously, seriously affect the CBO’s revenue projections for FY2014 and beyond, which have to be predicated on existing, rather than future projected, tax law.
– See more at: http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html?utm_source=davidkatz@cfo.com&utm_medium=email&utm_content=Click%20URL%20http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html&utm_campaign=Tax-News+%20Friday,%20August%2029,%202014#sthash.tgkhzjMK.dpuf
ased on its economic forecast, which anticipates that the economy will grow slowly this year, the CBO anticipates that the federal budget deficit for fiscal year (FY) 2014, under current law, will amount to USD506bn, around USD170bn lower than the shortfall recorded in FY2013. That deficit is wider than the USD492bn it projected in April, with its estimate of revenues dropping by USD26bn and expected expenditure declining by USD11bn billion.
At 2.9 percent of gross domestic product (GDP), the CBO points out that this year’s deficit would be much smaller than those of recent years (which reached almost 10 percent of GDP in 2009). However, federal debt would reach 74 percent of GDP at the end of this fiscal year – more than twice what it was at the end of 2007 (before the latest recession).
In fact, the CBO notes that persistent fiscal deficits during its long-term projections until 2024, would raise the federal debt to GDP ratio even higher. Although, according to its updated projections, the annual deficit would remain at less than 3 percent of GDP until 2018, and grow thereafter to reach nearly 4 percent by 2022, those persistent deficits would mean that debt would reach 77 percent of GDP in 2024.
Revenues, at some USD3 trillion, are expected to increase by about 8 percent in FY2014, compared to FY2013. Revenues from all major sources should rise this year, including individual income taxes (by an estimated 6 percent); payroll taxes (by 8 percent); and corporate income taxes (by 15 percent). Increases in wages and salaries and changes in laws – such as those affecting payroll tax rates and income tax deductions for investments in business equipment – largely account for the higher tax receipts.
The CBO is, however, also seeing some effects being caused by uncertainties within the corporate tax system, and, in particular, the congressional debate on whether to extend, in full or in part, the “tax extenders” (the 50 tax measures that expired at the end of 2013).
For example, on the basis of tax collections until July, the CBO expects receipts of corporate income taxes in FY2014 to be USD37bn less than the amount the agency projected in April, largely due to a revised assessment of the timing of businesses’ tax payments following the expiration at the end of December 2013 of increased provisions allowing them to immediately deduct 50 percent of their investments in equipment (one of the tax extenders). The CBO now expects that firms will also delay more payments from 2014 to 2015.
In fact, it has been estimated elsewhere that reviving the tax extenders continually over the next 10 years would cost about USD700bn, and would, obviously, seriously affect the CBO’s revenue projections for FY2014 and beyond, which have to be predicated on existing, rather than future projected, tax law.
– See more at: http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html?utm_source=davidkatz@cfo.com&utm_medium=email&utm_content=Click%20URL%20http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html&utm_campaign=Tax-News+%20Friday,%20August%2029,%202014#sthash.tgkhzjMK.dpuf
ased on its economic forecast, which anticipates that the economy will grow slowly this year, the CBO anticipates that the federal budget deficit for fiscal year (FY) 2014, under current law, will amount to USD506bn, around USD170bn lower than the shortfall recorded in FY2013. That deficit is wider than the USD492bn it projected in April, with its estimate of revenues dropping by USD26bn and expected expenditure declining by USD11bn billion.
At 2.9 percent of gross domestic product (GDP), the CBO points out that this year’s deficit would be much smaller than those of recent years (which reached almost 10 percent of GDP in 2009). However, federal debt would reach 74 percent of GDP at the end of this fiscal year – more than twice what it was at the end of 2007 (before the latest recession).
In fact, the CBO notes that persistent fiscal deficits during its long-term projections until 2024, would raise the federal debt to GDP ratio even higher. Although, according to its updated projections, the annual deficit would remain at less than 3 percent of GDP until 2018, and grow thereafter to reach nearly 4 percent by 2022, those persistent deficits would mean that debt would reach 77 percent of GDP in 2024.
Revenues, at some USD3 trillion, are expected to increase by about 8 percent in FY2014, compared to FY2013. Revenues from all major sources should rise this year, including individual income taxes (by an estimated 6 percent); payroll taxes (by 8 percent); and corporate income taxes (by 15 percent). Increases in wages and salaries and changes in laws – such as those affecting payroll tax rates and income tax deductions for investments in business equipment – largely account for the higher tax receipts.
The CBO is, however, also seeing some effects being caused by uncertainties within the corporate tax system, and, in particular, the congressional debate on whether to extend, in full or in part, the “tax extenders” (the 50 tax measures that expired at the end of 2013).
For example, on the basis of tax collections until July, the CBO expects receipts of corporate income taxes in FY2014 to be USD37bn less than the amount the agency projected in April, largely due to a revised assessment of the timing of businesses’ tax payments following the expiration at the end of December 2013 of increased provisions allowing them to immediately deduct 50 percent of their investments in equipment (one of the tax extenders). The CBO now expects that firms will also delay more payments from 2014 to 2015.
In fact, it has been estimated elsewhere that reviving the tax extenders continually over the next 10 years would cost about USD700bn, and would, obviously, seriously affect the CBO’s revenue projections for FY2014 and beyond, which have to be predicated on existing, rather than future projected, tax law.
– See more at: http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html?utm_source=davidkatz@cfo.com&utm_medium=email&utm_content=Click%20URL%20http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html&utm_campaign=Tax-News+%20Friday,%20August%2029,%202014#sthash.tgkhzjMK.dpuf
Based on its economic forecast, which anticipates that the economy will grow slowly this year, the CBO anticipates that the federal budget deficit for fiscal year (FY) 2014, under current law, will amount to USD506bn, around USD170bn lower than the shortfall recorded in FY2013. That deficit is wider than the USD492bn it projected in April, with its estimate of revenues dropping by USD26bn and expected expenditure declining by USD11bn billion.
At 2.9 percent of gross domestic product (GDP), the CBO points out that this year’s deficit would be much smaller than those of recent years (which reached almost 10 percent of GDP in 2009). However, federal debt would reach 74 percent of GDP at the end of this fiscal year – more than twice what it was at the end of 2007 (before the latest recession).
In fact, the CBO notes that persistent fiscal deficits during its long-term projections until 2024, would raise the federal debt to GDP ratio even higher. Although, according to its updated projections, the annual deficit would remain at less than 3 percent of GDP until 2018, and grow thereafter to reach nearly 4 percent by 2022, those persistent deficits would mean that debt would reach 77 percent of GDP in 2024.
Revenues, at some USD3 trillion, are expected to increase by about 8 percent in FY2014, compared to FY2013. Revenues from all major sources should rise this year, including individual income taxes (by an estimated 6 percent); payroll taxes (by 8 percent); and corporate income taxes (by 15 percent). Increases in wages and salaries and changes in laws – such as those affecting payroll tax rates and income tax deductions for investments in business equipment – largely account for the higher tax receipts.
The CBO is, however, also seeing some effects being caused by uncertainties within the corporate tax system, and, in particular, the congressional debate on whether to extend, in full or in part, the “tax extenders” (the 50 tax measures that expired at the end of 2013).
For example, on the basis of tax collections until July, the CBO expects receipts of corporate income taxes in FY2014 to be USD37bn less than the amount the agency projected in April, largely due to a revised assessment of the timing of businesses’ tax payments following the expiration at the end of December 2013 of increased provisions allowing them to immediately deduct 50 percent of their investments in equipment (one of the tax extenders). The CBO now expects that firms will also delay more payments from 2014 to 2015.
In fact, it has been estimated elsewhere that reviving the tax extenders continually over the next 10 years would cost about USD700bn, and would, obviously, seriously affect the CBO’s revenue projections for FY2014 and beyond, which have to be predicated on existing, rather than future projected, tax law.
– See more at: http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html?utm_source=davidkatz@cfo.com&utm_medium=email&utm_content=Click%20URL%20http://tax-news.com/news/CBO_Reduces_US_Corporate_Tax_Revenue_Forecast____65682.html&utm_campaign=Tax-News+%20Friday,%20August%2029,%202014#sthash.tgkhzjMK.dpuf