Recently the media has been given a lot of attention to job losses, and the ongoing health care debate, but one topic that has seemingly fallen off the radar is falling tax revenue. According to CNN Money, decreased federal tax revenue affect nearly all Americans.
Through the end of August, Uncle Sam collected 25% less in tax revenue for the year than during the same period a year earlier. The two biggest culprits were a 56% drop in corporate income tax revenue and a 20% drop in individual income tax revenue.
On balance, the Congressional Budget Office expects that tax receipts will be 14.9% of gross domestic product this year, well below the historical 18.3%average.
While revenue forecasts for next year are better, the CBO estimates tax receipts will only make up about 15.7% of GDP.
But two factors could lower that estimate. The first is whether or not the projections for economic growth and the unemployment rate prove too optimistic. If they do, that would reduce how much tax revenue Washington collects.