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Tax revenue jumps 22% in April, but U.S. deficit still looms large
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The U.S. Treasury ran a surplus last month, thanks to the April 15th tax deadline. But the federal government is still on track to end the fiscal year more than $1.5 trillion in the red.
April tax receipts totaled $776 billion — a 22% increase from the previous year. Treasury officials credited part of the jump to the growing number of people working and rising wages.
Government spending for the month rose 23% from a year ago, with the biggest increase — $26 billion — coming from higher interest payments on the federal debt. Interest payments have gone up as a result of both rising debt and today's high interest rates.
Government spending outpacing revenue
Seven months into the government's fiscal year, federal spending has outpaced tax receipts by $855 billion. The deficit so far is 8% smaller than at this point last year, but still remarkably large for a country with a strong economy and an unemployment rate below 4%.
Speaking at the Brookings Institution Friday, White House economic adviser Lael Brainard blamed much of the deficit on the 2017 tax cut.
"The Trump tax cuts and the Bush tax cuts and their extensions have added $10 trillion to the national debt, accounting for 90% of the non-emergency increases in the debt-to-GDP ratio since 2001," said Brainard, who directs the National Economic Council.
Large parts of the 2017 tax cut are set to expire next year, setting up a likely battle in Congress. Republicans want to extend the tax cuts while providing further tax relief to corporations and wealthy heirs. President Biden wants to extend the cuts only for those earning less than $400,000, while raising the corporate tax rate from 21% to 28%.
Extending the 2017 cuts would add more than $5 trillion to the deficit over the next decade, according to estimates by the Joint Committee on Taxation.
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