As Individual Witholding Taxes Roll Over, It Is Time To Ask Where The Corporate Taxes Are

Tyler Durden's picture

Two days ago, the US Treasury announced that for the Q2 fiscal quarter (January - March), the net borrowing need of the US would be $97 billion lower than its previous estimate, coming in at $444 billion for the three months (still a $115 billion monthly run rate, not nearly enough to last until the end of the year with the current debt ceiling capacity, and likely not even through the election). What the Treasury did not specify is where this incremental cash would come from, merely noting that the higher cash balance which it ended December 2011 with compared to estimates "was driven primarily by higher-than-projected receipts and lower outlays" implying that the Treasury was confident higher than expected tax receipts would continue.

There is however one problem with this: as the attached chart from the just released Q1 fiscal report from the Office of Debt Management shows, withheld taxes, the primary source of US government revenues, has just rolled over and is now posting negative Year over Year numbers (chart 1). Which is bad news for Tim Geithner if he hopes that the spike in tax receipts will continue, and for the TBAC which projects a lower than expected funding needs: in fact we are confident that the net issuance in Q2 will be substantially greater than the net forecast, and will likely be funded with short-term Bills, either ad hoc, or in the form of increased program Cash Management Bills issuance. Yet the fact that America can not live within its means is not news. What however, needs addressing is why, as Chart 2 shows, have US corporate taxes never regained their historical levels from 2007, when as is well-known, corporate profits have never been higher (if now rolling over finally), and corporate cash, especially that held off shore, at record levels? Because as the green line shows, the 12 month moving average of corporate income taxes, has barely budged from the recession lows. We wonder why nobody has asked the question: why is this the case and why have neither politicians nor individual taxpayers made an issue out of this yet?

Chart 1 - quarterly tax receipts: Withheld taxes has rolled over for the first time since the recession ended, at least officially.

Chart 2 - comparison of individual income taxes and corporate incomes taxes. Notice the divergence? As for Social Insurance Taxes, forgettaboutit.

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redpill's picture

Go ask that fuckface Immelt.

blindfaith's picture



and, if you think about...could you ask him how I can get my money back for this piece of total junk GE Profile Refrigerator.

dirtbagger's picture

Blindfaith -

I'll trade you a styrofoam ice chest for your profile appliance

Michael's picture

Isn't this what is supposed to happens when the participation rate drops to 1984 levels?

Xkwisetly Paneful's picture

When collecting lint interest on titanic mountains of cash or in essense paying 99% tax on interest income it is not really going to show up in effective tax receipts.

I have been around a while, this is some of the most perverse stuff I have ever witnessed.

They are saying loud and clear we would rather lose to inflation than try to come up with the next mousetrap.


HungrySeagull's picture

Mine failed within a day. We shipped it back and got a Samsung instead.

Manthong's picture

Everythings good.

Go buy some Facebook.

HungrySeagull's picture

I got out of Facebook, it is a timesink and probably a money sink now too.

No I've seen this movie before.

LetThemEatRand's picture

I think we can all agree that the problem is that the police and fireman earn too much and expect to be able to retire with benefits.  And that our corporate overlords need to pay less if we expect them to do us the favor of hiring us unworthy serfs.

Caviar Emptor's picture

Yes. Everyone knows that secretaries pay a higher tax rate than their billionaire bosses. It's kinda like frequent flyer miles and credit cards that kick money back. 

Solarman's picture

Especially when they make 500K and make more salary than their boss.

Tortfeasor's picture

I think we can all agree that police and fireman are paid at the local level, not the federal level, and therefore your trolling post is irrelevant to the issue.

lasvegaspersona's picture

I urge you to recall the Crime Bill of about 1992. Clinton assured the large city (read Democratic) police forces that he would keep their pay level up and allow growth if they just voted D and cracked down on gun owners rights. This was the beginning of the Federalization of everything and the beginning of the end of respect for government. Thanks to his cynacism we now have the America of today....and overpaid police. So shut up citizen, cops are better than you. Here in Las Vegas they can and will kill you if they feel like it. This is not a joke or exageration...check out today's Las Vegas Review Journal ($1.7 mil to a Mr. Cole's family. He was executed by a cop who was given a 40 hour suspension.) Thank you Bill Clinton for teaching us to respect our masters....we were getting too liberated weren't we?

Raging Debate's picture

Remember that quote in what was it, 1998 from Bill that went "Americans have too much freedom." I heard that again recently out of him. Perhaps he needs some detention time with his police pals to reconsider his views.

blindfaith's picture



Show me one corporation, tiny or mammoth, and I will show you expensed to death items that a worker can not deduct from his pathetic paycheck.  Add on the "defered" salary executive payments that end up being 'capital gains" and a cut off on SS of 115K , and you have a reciepe for a tax roll over.  What the hell is the surprise here?

Police and fireman...what's wrong with them getting paid 100k to 250K a year?  Shoot, isn't that what we all are making?

prains's picture

Corporately Captured Congress

redpill's picture

I prefer Corrupt Congressional Cockholes

DaveyJones's picture

corrupt congresional crackwhores

disabledvet's picture

The money always comes first. Corruption? That's "to be expected." Wall Street already factors it in to their algo's. I believe the technical term is "regulatory arbitrage." it also goes by the new name "losers in loser-ville" cuz "Uncle Salami's all out of 2008's."

Dr. Richard Head's picture

I am surprised this roll-over hasn't happened sooner.  Back in 2008 I decided it was high time to have 12 deductions.  The IRS taught me how to change the W4 -,,id=96196,00.html

If Uncle Sam can borrow from the Treasury, so can I bitchez.

lolmao500's picture

Seems to me they are ``assuming`` a lot of things.

DaveyJones's picture

unlike our tax, their tax, the unlimited super pac, actually buys them a government. 

redpill's picture

I'm glad I don't nearly the amount of government I pay for.

disabledvet's picture

Does it buy a good government? Or only "the best that (worthless) money can buy...

scatterbrains's picture

Would luv to see an overlay chart of  corperate profits vs. corperate taxes paid for extra visual effect

Tyler Durden's picture

Good idea. We will put that up shortly

asteroids's picture

Compare tax receipts to BLS employment to see how useless the BLS numbers are.

Tyler Durden's picture

TrimTabs did that in the earlier post on Friday's NFP number.

disabledvet's picture

I'm sorry...did you just say money printing destroys an economy? I'm being told every day now how Europe is being saved by it tho! (Now if only those Greeks would pay there taxes....

GeezerGeek's picture

That could be tricky. I once worked for a company that made stuff in China (PRC) for the U.S. markets. The factories were subsidiary entities that made fat 'profits' by charging the U.S. parent a very high price. Then the top dogs 'sold off' the factories to a consortium consisting of some of the same top dogs, but headquartered in China. Either way the profits stayed offshore, and either way the same guys rewarded themselves. The remaining U.S. company headed downhill shortly thereafter.

Reducing corporate taxes to zero might be more beneficial economically.

disabledvet's picture

Not as good as a true gold standard. Try and reward your...ahem..."self"...with that money. Of course not even this site advocates that only true measure of money. Even here that advocate for something called...."free gold." hehehehehe. "free gold." would you like a war with all that..."gold that is free"?

JPM Hater001's picture

We are about to have another revenue problem.

It's never a spending problem.  It's always a revenue problem.

pods's picture

Diverging functions of money in vs money out are surely a sign of prosperity.


monoloco's picture

All Americans deserve to have their taxes raised for electing the dumb fucks who convinced them we could have two enormously expensive wars, generous corporate welfare, and every conceivable pork barrel project, all while cutting taxes, unless we are made to suffer consequences for poor electoral choices, we are doomed to repeat them.

RKDS's picture

Pennsylvania's just about at the end of a 10-year plan to phase out most corporate taxes.  They had the governor's spokeperson, addressing a revenue shortfall (alot of tax receipts are down, but corporate tax is down _alot_), state that the administration is "puzzled."  This just in, water is wet and fire is hot, wouldn't want anybody to be "puzzled" by taking a bath or touching their stove top...

Xkwisetly Paneful's picture

Be real.

Corporate tax is way up it is just not called corporate tax.

Pennsylvania now tops the nation in money derived from gambling,

getting an extra billion plus a year out of thin air.

Shizzmoney's picture

And that our corporate overlords need to pay less if we expect them to do us the favor of hiring us unworthy serfs.

Corporations and the amount of blackmail they perform over politicans whether its pitting states tax codes against each other, or the China outsourcing paradigm, and holding the working class' balls in a job creation vice, is appauling, disgraceful, and irresponsible.

LOL at the corporate line.  And the big multinationals STILL find ways to complain about business in this country, "Taxes too high!  Too much regulation!  Not enough "skilled" workers!".  Notice how it is the wealthy financiers and CEOs complaining.  I don't hear much complaining from a single mother of two who has 3 jobs.  Whiile in while, small business owners are actually doing work and busting their ass each and every single day. 

Something has gotta give at some point.

disabledvet's picture

How about "free market capitalism is the best path to prosperity...provided no one has any money to pay their taxes." there's what comedians call..."a punch line" here. And I imagine it will soon involve someone actually being "punched" as well.

GeorgeHayduke's picture

Corporation have more rights than people and none of the responsibilities.

The question is, how long do the indoctrinated zombies put up with it? My guess is as long as their stomachs are full and they can have the latest entertaining trinkets available. If there is a supply chain blip in either of those two items, then the zombies will seek flesh to satisfy their needs and desires.

vote_libertarian_party's picture

In 2 years the consumer witholding went from 70B to 92B???  A 31% increase?


My taxes didn't go up.  The number of jobs added less birth\death was close to zero.  Where did that massive increase come from?

GeezerGeek's picture

I'm not sure I understand what you mean by "consumer witholding". The second chart does show receipts of individual taxes rising approximately that much, so maybe that'w what you meant. Is it possible that all those rich guys decided to pay capital gains taxes before any potential increases in tax rates? Just wondering. Or maybe it was the increased tax rates on all those severance packages: mine (last July) was big enough to put me into the top tax bracket for the payroll period in which I got the severance check. I'd complain, but at least I got a decent severance check.

QQQBall's picture

How many times in the past few years have you heard "I'm just lucky to have a job."

Hubbs's picture

I'll tell you where the sudden increase in tax receipts and therefore less immediate borrowing needs is coming from....I'm having to liquidate retirment funds with 10% penalty attached to make ends meet. 


And meanwhile, my former office manager, now that my practice is closed, is collecting unemployement. Despite 11 years of generous pay-to the point that she can make more sitting on her duff than she can working a similiar job, not only left and headed straight to the unemployment office, and didn't tell my accountant that she had been paying the quarterly  FUTA (federal unemployment tax) electronically (so where the hell was my accountant/), which I couldn't do  as of yesterday at the last minute because the account to the practice was closed months ago, now leaves me with a dilemma: Wire the funds thru Wells Fargo at a cost of $30 to send $44, or, after having logged in to create a new account for this one last payment, only to find AFTER I have entered all my data online at the government site  that it will take 7 days to send me my PIN so that I can then pay a penalty fee plus interest for the privilege of sending FUTA for the people like my ex office manager who left me stranded with this! 




I will never, ever, start a business or practice again. Never mind all the obstacles to entry. It's the butt-fucking you take when you try to (or have to) close. The government has got its tentacles in every pocket and orifice of your body, and they (the federal workers who do no productive work) don't give a shit about anything except clocking in and clocking out to get a paycheck.

lasvegaspersona's picture


use employee leasing

I have for 15 years, what they charge in fees they make up for in reduced health  insurance costs.

I effectively have no employees.

onebir's picture

If the US system is anything like the UK systems, here are two innocuous possiblities that could explain why corp tax receipts have recovered slower in the US:

1) carried-forward losses, which reduce taxable profits until they're used up

2) longer lags between receiving income and paying the taxes on it. (For a long time CT installments in the UK were based the tax charge on prior year profits, which meant a lag in CT receipts when profits were increasing)

Less innocuously I read that some corporates (eg google) have been able to use offshore vehicles to drastically reduce their liabilities.  Or maybe the strength of reported profits is all accounting shenanigans :)

FreeNewEnergy's picture

You left one out:

3) Plain, old-fashioned lying.

disabledvet's picture

That's "three round trippers" as they say on this side of the pond. Anything currently in existence both over here and over there are bankrupt. PERIOD. The only real economists on this planet are me and Jimmy Cramer who understand that only NEW money is ACTUAL money in this regime. That would mean...AGAIN..."cloud computing and the nat gas space." not surprisingly even the President of the United States is now agreeing with us cuz, "yep, that guy's got bills that can't be paid too." Of course his bills only amount to mere..."trillions" hard could that be?

ljag's picture

I suggest we adopt the Greek tax code.......where you just pretend to pay taxes. With little or no money, wudda they gonna do. Huh?

lynnybee's picture

no amount of taxation will fix this LOOTING & FRAUD .    the U.S. TREASURY has been looted ...... clawback is a great way to get taxes .   

A Nanny Moose's picture

Corporations don't pay taxes. They collect them.