WASHINGTON, D.C. – Federal tax revenues in FY 2023 were down nine percent from the year prior – falling by $455 billion. Predictably, rather than admit that Bidenomics is leading to slower growth and less revenue, the White House is blaming the pro-growth policies in the Tax Cuts and Jobs Act (TCJA). The facts speak for themselves.
The lower taxes for working families and small businesses in TCJA fueled economic growth at a rate one full percentage point higher than the Congressional Budget Office’s pre-TCJA projections. The larger economy boosted revenues in FY 2022 to a record high of $5 trillion – $884 billion higher than CBO’s forecast for FY 2022 following passage of TCJA. As previously noted by Ways and Means Committee Chairman Jason Smith (MO-08), TCJA delivered not just a roaring economy but also higher wages for working families:
“In the immediate years after passage of the TCJA, the economy grew a full percentage point higher than the previous 10 years. It sparked the fastest growth in real wages in the last 20 years, and Americans making less than $100,000 saw a 16 percent cut in their tax bill. At the same time, federal tax revenues – including corporate tax revenues – hit a record high in 2022. Overall revenues were 48 percent above 2017 levels and well above the Congressional Budget Office’s projections. So let’s not pretend that the TCJA robbed Uncle Sam of anything.”
So what happened in 2023? Democrats should look in the mirror to find the real culprit for falling revenues: Bidenomics and their special interest tax giveaways to the wealthy and well-connected.
“Bidenomics” Driving Down Revenue
- Families and businesses have seen prices increase by over 17 percent since President Biden took office – cutting real wages and sparking higher interest rates.
- Americans have experienced a nearly 4 percent reduction in real wages and benefits during the Biden Administration. Because of higher interest rates to combat Biden’s inflation crisis, the Federal Reserve is no longer turning a profit – its payments to the Treasury have dropped from $107 billion in FY 2022 to under $1 billion in FY 2023. An underperforming economy lowered asset values, substantially decreasing capital gains tax revenues.
- Biden’s economic policies have kept the labor force participation rate below pre-COVID levels, leading to lower tax revenues from fewer workers earning fewer paychecks.
Democrats’ Special Interest Giveaways
- Democrats’ so-called “Inflation Reduction Act” included over $650 billion in special interest handouts that will flow primarily to the wealthy and well-connected, including billion-dollar corporations and big banks.
- These special interest handouts are a massive transfer of wealth from working families to the wealthy elite and are already putting a dent in tax revenues.
Temporary Tax Collection Challenges
- Following wildfires and other natural disasters, the IRS postponed the filing deadline for taxpayers in California – leaving an estimated $70 billion temporary gap in federal tax revenues for FY 2023.
Ballooning Employee Retention Tax Credit (ERTC):
- As of September, the IRS has made $220 billion in ERTC payments, with another $120 billion in the pipeline, according to the Wall Street Journal – a total that is six times higher than the original CBO estimate of $55 billion.
- Fraud in the ERTC program has become so prevalent that it earned a place on the IRS’s annual “Dirty Dozen” list of worst tax scams.
Biden’s Global Tax Surrender Will Drain Even More Revenues
- The Joint Committee on Taxation (JCT) estimates that Biden’s global minimum tax deal negotiated at the Organization for Economic Co-operation and Development (OECD) will result in over $120 billion in lost U.S. tax revenues.
- While draining U.S. tax revenues, the OECD plan will also harm American competitiveness and hand a strategic economic advantage to the Chinese Communist Party.