US

Feds Collect Record Taxes In January After Tax Cuts

The U.S. government collected a record $361 billion of taxes in January, up 5 percent from 2017, in part driven by the improving economy and high spending over the holiday season.

The Treasury Department also saw a surplus of $49 billion for the first month of 2018 according to a report released Monday, but that surplus doesn’t mean that the government is on solid financial footing.

From October 2017 through January, the government brought in $1,130,550,000,000 in taxes and only spent $1,306,268,000,000. But that surplus likely won’t last very long.

“It’s not unusual for Treasury to collect surplus in January,” Romina Boccia, budget and spending expert at the conservative Heritage Foundation, told The Daily Caller News Foundation. In fact, over the past decade or so, the chances of collecting a surplus during the first month of the year is better than 50 percent.

The January collection reflects revenue from the final months of the year, when consumer spending is higher and companies give out bonuses. The increased individual spending and wages funnel more money to the government, and 2017 was no exception.

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The record collection this year does reflect an improving economy. “It’s overall more people being in the workforce, and people earning a little bit more, that drove the higher collection,” Boccia said.

Collection for the rest of the year will likely fall sharply due to the GOP tax reform bill that allows individuals and corporations to keep more of their money, Boccia said. “It really doesn’t set the tone for the rest of the year. We shouldn’t look at January and predict revenues for the rest of the year,” Boccia said.

Add the recent budget signed by President Donald Trump early February to the falling tax revenues, and any surplus posted in the early part of the year will be quickly eclipsed. “The deficit was really turbo charged by the budget passed last week,” Boccia said. “We will see lower revenues and increasing deficit for the remainder of the year.”

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