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December Rolling Tax Witholdings Collapse To Multi-Year Low
The month of December was supposed to be a bright spot in the Treasury's tax withholding calendar: after all taxes used to be the way this great nation funded its coffers until the Fed and Primary Dealers came along. And with Wall Street bonuses presumably at record levels, the withholdings were expected to jump not only compared to December of last year, but to all Decembers. Well, as is the norm with this administrations, these expectations never materialized, and instead rolling withholdings hit recent record lows.
The rolling twelve month individual tax witholdings in December dropped to a new multi-year low of $1.298 trillion (an 8.2% decline from last December). Yet this was nothing compared to the company tax witholdings. We thought November was bad at $99.2 billion. December came in at a stunning $92.8 billion, 61.5% lower then the LTM December 2008 number. Record financial profits, record bonuses, and the Treasury and US taxpayers are none the wiser.
How this stacks up on a month over month basis is presented below: in December individual tax withholdings were $151.7 billion, a surprising 9.4% reduction from December 2008 ($166 billion), while corporate tax withholdings were down a whopping 16.1%, at $39.8 billion. The all time record profits on Wall Street have been insufficient to even meet last year's tax collections, as Main Street has completely collapsed. Now this is a budget deficit change you can truly sink you teeth into.
h/t Mike
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<sarcasm on>
Yup, I can see the recovery coming just around the corner. Just look at those beautiful charts.
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What are you worried about? Surely the Fed can print us into prosperity? Oops, forgot to turn my sarcasm on...
Indeed. National life on tweaker time (see previous response on QE 2.0) rolls merrily along.
Miles,
Nice to see your head above water and the brain (and heart) fully engaged...as always.
fanftastic. I love this recovery.
Paying taxes is so 2007
If I might add to your wonderful observation. Paying taxes is so (involuntary withholding) middle class.
I do believe in the middle class, I do believe in the middle class!
statistics you can believe in.
8.2% drop in individual is quite consistent with
unemployment of 10%.....i have been reading
that real time tax collections dropped through
the floor but i would hardly characterize an 8.2%
fall as going through the floor....
it also corroborates the bls numbers showing the
brunt of the unemployment falling on the lower
deciles with center of gravity in the upper
portion.....
sales tax numbers may be in worse shape...
I reckon people are opting not to mark off the box on their unemployment form that specifies withholding from their benefit check.
Maryland raised individual taxes in 2009 by over 27% and "lost" one third of their millionaires. Imagine that! R$ich folks are such dumb asses. Avoiding the IRS- huh.
I live in Baltimore and have a rental property in Baltimore City, they raised my property taxes by 150% because the property was not Owner occupied and was not shielded by the Homestead credit were they can only raise your taxes by 4% a year. They effectively took 50% of my Gross Income on the property. So, I get to pay to maintain it, rent it, repair it, cover any vacancy and I get to keep what ever is less than my 50% and they get 50% gross without any losses. What a deal.
Their tax rate is $2.44 per 100, I think it is even higher than New York City. They got Investors to invest and revive the City and their thanks is to kill you with taxes 20 years later.
This is going to hurt Baltimore City as many of the Investors that built the City up will leave and it will return to the squaller it was before the investors came in and rebuilt the City.
Wow....even the Homestead credit hike ceiling of 4 % is an outrage.
Baltimore has done a wonderful job with waterfront revitalization. I was stunned with the accomplishments when there a couple years ago after not having been there for 25+ years.
What a shame if it unwinds due to oppressive property taxation.
Thanks for the story. I really sympathize with your situation.
How else are they supposed to pay all the City Hall employees 70-100% of their doctored up 'final salary' for life?
I get it! On a pro-forma basis, GDP is goind up. Maybe the US can follow Greece's example and add the black market economy in its GDP figures, you know crack dealing, massage parlors, etc. As in the birth-death model for nonfarm payrolls...
With the FED focusing all of their attention to Wall Street and not on Main Street they now have a huge problem with Tax Receipts. No jobs no income taxes.
This is a huge problem as the Government needs the Tax Receipts to fund themselves and pay all of the interest on the existing Debt and all of the new Debt just created.
I think that it will be a downward spiral as more people lose their jobs and the Government needs to create more and more money with less and less tax receipts.
Boomers are Retiring and are not going to contribute like they did in the past. They were the ones with the high paying jobs. Now you have entry level people earning substancially less that will pay fewer taxes. We have a large portion of the people now on unemployment and many slowly going onto the Welfare rolls.
No one left to pay into the Governments coffers for redistribution of wealth to Wall Street. Such a shame.
The swelling ranks of the unemployed are W2 payers for the most part. We know that story 9.8% (really 18%).
Perhaps the "self employed" remainder sees the future and says: "fuck if I'm going to fund this bullshit"
I am sure the Ministry of Information will put a spin on the tax receipts for the masses, all is well, recovery is going according to plan.
Ach Tung baby.
crap and tax will fix it.
Speaking for those of us who make quarterly estimated payments, this number will drop--maybe a lot--in January. My Q1 '10 payment will be a fraction of what my Q1 '09 payment was.
+1. I just calc'd mine today. It is 75% lower YoY. While I am thrilled to stick it to the gummint, I wish I had done it be cheating and not by losing income.
'Bout the same fig's as me. I'm having the same wishes, too.
My deal's pretty dependent on corporate spending, and things are actually (oddly) looking up for '10 to this point. Won't be '07 or '08, but looks to beat '09. Which would be sort of weird.
Cash flows mean nothing; the Fed will finance us in perpetuity. Plus, when SPX hits 2000, we can all sell and be happy.
LMAO - this smells like early 2000.
yeah, what's the problem, if we need more money we can just print it. it ain't worth anything anyway.
166 to 151 is not that bad considering that all the housing assholes in SoCal stopped paying their taxes.
And all over Cali, gubmint workers took 10-15% furlough paycuts in 09. More to come.
I'm shooting for the $3000 welfare borness
Theres no stoppin what can't be stopped.
And no barganin' with the other side.
And we upped our withholding for 2011 taxes that has blocked out the sun with it's pending fallout a year from today.
If we figure it right we might get a slight refund this year and none the next. Just no tax bill to pay.
The Nation gets it's fair share of taxes off our wages. Fine. But when the National withholding is insufficient to sustain this USA, they will raise taxes even more for 2011 and beyond.
I remember Baltimore's rebuilding back in the 70's it was good for the City and good for you and me. But now.... the Ravens come roosting and must be fed.
No one's hiring.
Would a world war stimulate our economy?
Looks like the democrats have managed to engineer the biggest tax cut in history.
Be wary of strong drink. It can make you shoot at tax collectors... and miss. ~Robert Heinlein
Maybe the whole country is "Going Geithner"?
What the hell do you think is going to happen when you give a known tax evader a plum government job instead of a jail sentence?
It looks like little timmy forgot to pay his share again.... dammit
Anybody know how many years you can carry foreward a loss ??? I'll bet there'll be a lot of losses carried foreward for several years.
Ministry of information & Spin ??? They need to hire Bagdad Bob ! Oh, but how will they pay him ? Hmmmm, Speaking of which, is California still paying with IOU's ?
Did you account for the Making Work Pay foolishness which effectively reduced withholdings?
Did you account for the Making Work Pay withholding reduction foolishness?
Did you account for the "Making Work Pay" withholding reduction foolishness?
Any chance you could source the data?
Tyler -- Any chance of sourcing the data?
102.8% increase in unemployment borrowing in December over November -
http://yophat.blogspot.com/
Main street is in death convulsions. Long as the Fed can keep the backstop going...I think we'll remain intact. I do expect to see some sporadic riots though as the new fiscal year comes around and its teachers vs cops vs firefighters vs bureaucrats!
Good synopsis from Karl Denninger on crossing the tipping point in the ability to take on new debt and service current debt here -
http://market-ticker.denninger.net/archives/1818-A-Warning-To-Western-Go...
Stuck in a deflationary death spiral that took decades to build!
Will the IRA to Roth IRA conversion cause a bump up in tax collections ??
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Lower taxes. Just what we need to fight a recession.
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