Tax revenue is the fuel for government programs. And with the current recession, Federal tax revenues are plummeting – in fact, tax receipts are projected to drop 18% this year–the largest one year decline since the Great Depression.
For example:
- Individual income tax receipts are down 22% from the previous year.
- Corporate income taxes are down 57%.
- Social Security and Medicare tax receipts are expected to drop.
Expensive new programs are being debated such as the health-care legislation that could add $1 trillion over the next decade. Our national debt is at $11.6 trillion and growing–see the figures on the U.S. National Debt Clock or go to Times Square or go to the Bureau of Public Debt to see the amount, to the penny.
How Congress Is Spending Our Money
The chart to the right shows how Congress is spending your money.
So how do we pay for it all with less revenue coming in?
A quick recovery would help these revenue figures increase, but without that speedy recovery, many will be asking: Where’s the money?
Lesson: There is no free lunch. With expenditures rising and revenue falling, the only way to make up the shortfall is through economic growth (that generates more tax revenues) and/or higher taxes.
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