While Capitol Hill lawmakers are screwing around considering ways to deal with the country’s impending financial deadlines, Congress’ independent budget analysts announced some good fiscal news.
The U.S. Treasury picked up $284 billion in August. That added revenue, according to the Congressional Budget Office (CBO), means Uncle Sam’s budget deficit at the end of last month was $411 billion smaller than at the comparable period last year.
That sizable reduction, making the budget deficit around $753 billion for the first 11 months of the 2013 fiscal year, is noteworthy.
At this point in 2012, the budget deficit was $1.164 trillion. The previous low budget deficit was $1.23 trillion in 2011, while the high was $1.89 trillion in 2009, according to Treasury Department data.
Even the CBO is a tad surprised at the shrinkage (insert your own Seinfeld-inspired joke here), noting in its blog that “the federal budget deficit has fallen faster than we expected a few years ago.”
Source: CBO Monthly Budget Review for August 2013
Money, money, money: But I’m a tax geek, meaning I tend to focus on revenue. So the $284 billion in collections recorded by the CBO is this week’s By the Numbers figure.
Just where did the money come from?
The biggest chunk came from individual income and payroll taxes. Together those collections increased 14 percent, or by $251 billion.
Payroll taxes withheld from workers’ paychecks rose by $160 billion, or 10 percent, primarily because the 2 percentage point payroll tax cut expired at the end of 2012. Effective this January, the full 6.2 percent portion of FICA again started coming out of workers’ pay.
As for income taxes, January also marked the appearance of higher tax rates for some folks earning larger amounts.
Taxes that weren’t withheld: Other taxes that weren’t withheld also added to Uncle Sam’s bottom line. This category of taxes increased by 27 percent, or by $91 billion.
Most of these nonwithheld taxes were the 2012 annual Form 1040 (and 1040A and 1040EZ) filings submitted between February through April. Those payments, says the CBO, were much larger than 2012’s amounts.
Part of the tax money during this period also came from increased estimated payments, made in the spring and summer for the current tax year. Remember, you can continue to do your part toward budget deficit reduction by sending in your third estimated tax amount for 2013 that’s due Monday, Sept. 16.
Corporate tax contributions: Companies contributed, too. The CBO says that net corporate income taxes during this period were higher by $30 billion, or 16 percent.
The budget analysts surmise this is likely because of growth in taxable profits in calendar year 2012 and the first half of calendar year 2013.
These numbers should give the House and Senate some maneuverability in their upcoming fiscal 2014 budget wrangling.
Still, don’t expect the process to be easy or quick.
Conventional wisdom is that Congress will pass a stopgap spending bill, possibly as soon as next week, to keep spending at current levels for two to three months while lawmakers hammer out a final budget deal.
Of course, there’s not been much that’s been conventional about this current Congress.
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