US Federal Deficit Reduced by Tax Revenue Boost

The United States' 2006 federal deficit may be substantially less than previously forecasted due to dramatic growth in tax revenues, according to the Congressional Budget Office.

(PRWEB) May 11, 2006 -- The United States' 2006 federal deficit may be substantially less than previously forecasted due to dramatic growth in tax revenues, according to the Congressional Budget Office.

The Congressional Budget Office (CBO) is a non-partisan arm of Congress. In the CBO's monthly Budget Review, issued last week, the deficit is reported to be "significantly less" than the $350 billion previously predicted. The report indicated that the deficit may be as low as $300 billion for 2006, assuming that the pending supplemental appropriations and tax reconciliation legislation is enacted.

Earlier in the year, the CBO predicted that the deficit could exceed $400 billion in 2006 due to tax cuts and new spending. Many economists agreed. It also said that President Bush would most likely be unable to keep his 2004 promise to cut the federal deficit in half by the end of his term.

The CBO now estimates that in the first seven months of fiscal year 2006, the federal government ran a deficit of only $183 billion, $53 billion less than last year at this time. In March, the Treasury reported a deficit of $85 billion, $2 billion less than the CBO had predicted.

For the reported period, receipts rose by $137 billion, more than 11%. Receipts of corporate income taxes have shown the most rapid growth this year, around $40 billion, or 30%. Receipts of individual income taxes have also increased by more than $55 billion, or 10.2%. Receipts of social insurance taxes are up by 7.2% to $32 billion.

CBO did not expect the rise in the payments of corporate income taxes through April. The CBO expected receipts for the entire year to increase by $24 billion. In the first seven months of the year, they have already increased by $40 billion.

"It is very likely that corporate receipts will end the year well above CBO's previous projections, with the amount depending on corporate profitability in future months," said the report.

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