U.S. Deficit Soars To Highest Level Since 2012 Under Republican Tax Plan
Republicans argued their revised tax law would benefit the economy, but recent data from the Treasury Department shows it increased the national deficit to $779 billion, the highest it’s been since 2012.
REPUBLICAN-BACKED TAX PLAN GREW DEFICIT
The 2018 fiscal year spans October 2017 to September 2018, and within that timeframe the deficit hit $779 billion. A significant portion of this increase can be credited to anemic revenue growth, mainly from the sizable tax cuts that went into effect this year. However, whereas most private citizens have not filed their taxes under the revised version yet, corporations pay their taxes every quarter and therefore have already been using their new lower rate.
Treasury data demonstrates that tax revenue gained from businesses dropped 31 percent in the 2018 fiscal year while individual tax revenue went up 6.1 percent. The total revenue went up only 0.4 percent from the 2017 fiscal year.
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The Committee for a Responsible Federal Budget performed an analysis that shows this is a historically low growth rate, writing, “This revenue growth rate is the eighth lowest in the past 50 years, and the seven lower years either coincided with a recession or tax cuts/expiring tax increases enacted shortly after a recession. As we have noted, though, even this slight revenue growth understates how much the 2017 tax law is reducing revenue since the fiscal year totals include revenue raised from the pre-tax law code.”
Republicans argued their tax reform would pay for itself and potentially reduce the deficit, and some might argue it still could as it hasn’t been in effect for a full year yet. House Speaker Paul Ryan (R-Wisconsin) said it would “help hard-working Americans who have been left behind for too long,” adding how they were “giving the people their money back.” Senate Majority Leader Mitch McConnell (R–Ky.) and Treasury Secretary Steven Mnuchin also went on record supporting the tax plan’s merits.
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