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Tomorrow, April 18, 2017, is Tax Day in the United States, the date by which all Americans who earned income in 2016 must either file their income tax returns and send a payment to the IRS or file for an extension to file their income tax returns for 2016 later this year.
It’s no secret that the U.S. government runs in the red, where it spends far more than it collects in revenues, but what may surprise many Americans as they pay their income taxes is that the U.S. government has already been collecting record levels of taxes this year. Terrence P. Jeffrey of CNSNews describes that surprising finding from data reported in the U.S. Treasury’s monthly statements.
The federal government collected record amounts of both individual income taxes and payroll taxes through the first six months of fiscal 2017 (Oct. 1, 2016 through the end of March), according to the Monthly Treasury Statement.
Through March, the federal government collected approximately $695,391,000,000 in individual income taxes. That is about $7,387,280,000 more than the $688,003,720,000 in individual income taxes (in constant 2017 dollars) that the federal government collected in the first six months of fiscal 2016.
The federal government also collected $547,491,000,000 in Social Security and other payroll taxes during the first six months of fiscal 2017. That is about $2,731,820,000 more than the $544,491,000,000 in Social Security and other payroll taxes (in constant 2017 dollars) that the government collected in the first six months of fiscal 2016.
Despite collecting record amounts of individual income taxes and payroll taxes, the Treasury still ran a deficit of $526,855,000,000 in the first six months of fiscal 2017.
The chart below reveals how the U.S. government’s cumulative spending and tax collections for its current Fiscal Year 2017 (FY 2017) compares with that for last year (FY 2016).
The chart also reveals the explanation for why the U.S. government is running in the red. At no time during the year does the cumulative spending of the U.S. government ever drop below the cumulative combined amount of the income and payroll taxes it withholds from American paychecks and the student loan debt payments it collects from Americans who borrowed money from the government.
Unlike the money it collects through taxes and student loan payments, where the ever-changing state of the U.S. economy can greatly affect the incomes of tax-paying Americans, the U.S. government has full control over the amount of money that it spends. If U.S. politicians really wanted to get serious about improving the fiscal health of the U.S. government without imposing an even greater tax burden on regular Americans who are already paying record amounts of taxes, they would take steps to more closely match the amount of federal spending to the amount of revenue that the U.S. Treasury actually collects each month rather than allow its spending to continue running on autopilot.
As for how to cut spending, science has some very clear answers. For politicians however, that the federal government’s spending remains so untouched and so steady from year to year is a problem that can be attributed to their misplaced priorities.