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The Trump Tax Cuts Are Coming: Will the Deficit Increase?

March 5, 2017

Armchairpoliticiantaxcuts, Brad Peery, ArmchairPolitician.US

The fiscal 2017 budget estimate is that taxes of $3,477 billion will be collected, up 4.2% from fiscal 2016.

Corporate taxes are forecasted to be $343 billion, or 9.9% of collections, and about flat over the 2 year period since fiscal 2015. The overall corporate tax rate should be about 35%. Far larger are employee payments that corporations are required to pay.

There is discussion in the Congress that the corporate tax rate might drop to 20%. This should be about a 4.2% decline in overall tax receipts.

There is discussion about reducing personal tax brackets to 3 from seven.

Individual taxes of $1,724 billion, or 49.6% of receipts are estimated. This would be a 5.9% increase. There are 100 million households, so the average household tax payment is about $1,724 per household.

A further discussion is:

Income Overview

  • Income from individual income taxes in 2017 is estimated to be about 49.6% of all receipts that year. This is far greater than average when compared to receipts from other years (average proportion = 45%).
  • Payroll tax income is estimated to be about 31% of all receipts that year. This is greater than average when compared to receipts from other years (average proportion = 30%). Payroll taxes are taxes that employers are required to pay when they pay their staff their salaries.
  • Corporate income taxes are estimated to make up 9.9% of all receipts that year. This is less than average when compared to receipts from other years (average proportion = 14%). Corporate income tax is imposed at the federal level on all entities treated as corporations.

ArmchairPolitician.US Expectations: The above analysis provides an assessment of government budget forecasts for Fiscal 2017. When the Trump budget is released, we will be in a position to assess the impact of tax cuts on individuals and corporations, and judge the impact tax reductions might have on the deficit. Of major importance will be the inflation rate assumed (2%?) and the economic growth rate forecasted (over 3%)

ArmchairPolitician.US: Household Income Has Been Declining, and the Reasons for This Will Be Discussed in a Future Blog.

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