Tax revenue growth is sluggish, economic growth – listless. We are on a course where nobody wins…
It is time to think outside-the-box…
ZeroHedge, June 9, 2017 – Excerpts”
“After flatlining for the past year, US income tax receipts – both at the federal government and on a state and local level – have been disappointing, and have posted a sharp drop since the start of the year, which is “sounding an alarm about the health of the US economy” in BofA’s words (in addition to the countless other alarms about the health of the economy, which however are ignored due to the record stock market).
As Bank of America highlights something we warned about last September, according to the Rockefeller Institute and CBO, US federal income tax receipts have come in about 3% below expectations this year.
In fact, corporate income tax receipts fell a sharp $7bn in 1Q, the biggest drop since the recession. Since corporate income tax receipts only make up about 14% of the total, there was still a modest gain in overall state and local tax receipts. While there has been particular weakness of late, the trend through last year was weak; according to the Rockefeller Institute, total state tax collections grew only 1.2% in FY16 (declined in real terms), the weakest performance since 2010.
On a federal level, it will impact the amount the government has to borrow to fund its deficit, therefore determining when the government will hit the debt ceiling. This is quite relevant today since the debt ceiling was officially reached on 17 March and has been extended using extraordinary measures. However, the weakness in tax receipts could create challenges, pulling forward the date that the debt ceiling is hit. This was likely a motivating factor for Treasury Secretary Mnuchin to ask Congress to raise the debt ceiling before the Congressional summer recess begins on 28 July. In our view it is possible this becomes another point of conflict in Washington in coming weeks.
But most importantly, economists care about tax receipts because it is one of the few unvarnished, unadjusted, and realistic data points regarding the health of the overall economy. Tax receipts are a function of income creation in the economy: a slow-down in tax receipts indicates a slowing in income creation and therefore overall economic performance. Growth in federal tax receipts trends with the growth in aggregate payrolls (aggregate hours worked x earnings), which is why the recent deterioration in federal tax receipted is especially troubling.
It is now time for an economic plan where everyone wins.
The Leviticus 25 Plan.
According to the CBO, our government is on track to add a minimum of $3.497 trillion to the national debt over the next five years, an average annual deficit or $699.4 billion.
The five year accumulating deficit increases, totaling $3.497 trillion, will be weighed down further with a related interest expense (2.23% per annum) amounting to $200.96 billion, for a total of $4.196 trillion.
The Leviticus 25 Plan generates a total government recapture benefit over the first five years of the program (federal income tax refund recapture plus federal expenditures recapture) of $8.56 trillion, an average of $1.72 trillion per year.
The Leviticus 25 Plan recapture provisions thereby generate an average annual budget surplus over the next five years of $1.02 trillion per year ($1.72 trillion – $699.4 billion) plus additional savings of $200.7 billion in unrealized interest expense.
The annual $1.02 trillion surplus during each year (2017-2021) will be used, in turn, to reduce the Federal Reserve Citizens Credit Facility balance sheet from the initial expansion event.
The Leviticus 25 Plan is unquestionably the most powerful economic acceleration plan in America. It is the only economic plan that pays for itself over 10-15 years.
The Leviticus 25 Plan 2018 – $75,000 per U.S. citizen