Despite Pandemic, Federal Revenue Highest in 44 Years
October 18, 2021
The Congressional Budget Office (CBO) estimated that federal tax receipts topped $4 trillion in fiscal year 2021, growing by $627 billion in 2020, (an 18% increase) marking the largest increase in revenue to the federal government since 1977.
The increase reflects “the general strength of the economy over the past year,” according to CBO with spending substantially boosted by programs and policies such as expanded unemployment compensation, the CARES Act, Paycheck Protection Program and the American Rescue Plan Act. Corporate tax receipts were up 75% to $370 billion, while individual income taxes were up 27.5% to $2.05 trillion. 80% of individual income tax receipts came from the top 10% of earners.
2021 Largest Increase in Federal Revenue Fodder for Democrats and Republicans Alike in Reconciliation Bill Negotiations. The news will surely influence Congressional negotiations over the size of the reconciliation bill and both Republicans and Democrats will use the new data to argue for or against a larger reconciliation bill. The Wall Street Journal editorial board was quick to jump on the news, noting, “The rich had a good year, but they also paid a huge fiscal dividend in taxes.” The editorial noted that the revenue boom came under the current 21% top corporate tax rate and asked, “All of this raises the question: With tax revenues coming in like a gusher, and the economy slowing from supply-side shortages, why raise taxes at all?”