Bush’s tax cuts are reducing the deficit quite nicely. Deficit hawks need to keep this in mind when the Democrats call for tax increases using the deficit as their excuse. From today’s Opinion Journal (subscription required):
The myth persists in some media circles that the federal budget deficit is “surging” or ballooning or something terrible — all of which is served up as ammunition for those in Congress who want a tax increase. At the risk of being drummed out of the guild, we thought you’d rather have the real story.
The deficit has in fact declined by some $165 billion over the past two fiscal years, and according to the most recent data has continued to fall in the first quarter of fiscal 2007. The latest Treasury estimates for January show that tax receipts in December were $18 billion higher than a year earlier, helping to boost the budget surplus for the month to $40 billion, up from $11 billion a year ago. December is typically a good month for revenues due to year-end tax payments.
Meanwhile, for the first three months of fiscal 2007 through December, revenues climbed 8.1%, building on double-digit revenue increases in the previous two years. Corporate income taxes were up a remarkable 22.2% in the first fiscal quarter, showing that the government continues to grab a nice chunk of the rising business profits that so many of our politicians like to deplore. Individual income taxes rose 8.8%, thanks to strong wage and salary growth. Much of this revenue comes from “the rich,” believe it or not.
I believe it. Take a look at the CBO’s report. You’ll see that for fiscal year 2007, the top 10% of income earners will pay almost half, 48%, off all the taxes, the top 5% will pay 37% of all taxes, and the top 1% will pay 21% of all the taxes.