To justify this extraordinary fiscal expansion, they have continued to point fingers at a familiar scapegoat — the wealthy — claiming America’s budget woes would evaporate should they simply pay their “fair share.” But the latest data on federal revenues clearly puts the lie to this claim.
The most recent budget data from the nonpartisan Congressional Budget Office (CBO) estimates federal revenues for the 2021 fiscal year will exceed $4 trillion, an 18 percent increase relative to the previous year. Though total federal revenues decreased somewhat last year due to the pandemic, dropping from $3.46 trillion in FY 2019 to $3.42 trillion in FY 2020, this year’s increase more than makes up for that decline.
What’s more, the revenue increase is driven largely by taxes paid overwhelmingly by the wealthy. According to the CBO, 97.4 percent of the revenue increase relative to last year comes from corporate taxes and individual income taxes. The individual income tax, in particular, skews overwhelmingly wealthy, with the top 1 percent shouldering just over 40 percent of the income tax burden. Meanwhile, the major federal revenue source that is structured less progressively, the payroll tax, actually saw a $2 billion decline in receipts compared to FY 2020.
Those figures contradict the progressive claim that the only thing standing in the way of their agenda is a tax code that doesn’t adequately tax the wealthy. For years, Democrats have blamed the 2017 Tax Cuts and Jobs Act for cutting individual income tax and corporate tax rates. But even fresh off a recovery from a global pandemic-induced recession, this latest data shows that revenues from those areas of the tax code remain sizable indeed. Corporate income tax revenues are right around the level the CBO was forecasting for this year prior to the passage of the TCJA, and individual income tax revenues are even higher.
This obfuscation is all meant to cover a simple truth — progressives can’t come close to funding their expensive, expansive agenda off the backs of the rich. Though estimates of the wealth held by America’s richest denizens can appear staggering, it represents little more than grocery money to the enormous money churn that is the federal government.
It’s good to see tax revenues recovering, if only so that the debt burden passed on to future generations grows at a slightly slower pace. But Americans should also take care to note the lesson being presented here: The rich can’t help you dig out of the fiscal hole progressives want to put you in.
By Andrew Wilford
Jan 7, 2022
Andrew Wilford is a policy analyst with the National Taxpayers Union Foundation. He wrote this for InsideSources.com.