BEA: Government Receipts Rise 11 Percent
March 30, 2006
Data from the final report for 2005 from the Bureau of Economic Analysis (BEA) show tax revenues rising across the board last year. The following is a brief overview of government finances for 2005 at both the federal and state/local level.
Federal Government Federal government receipts (current receipts) rose by 12 percent ($1.974 trillion to $2.225 trillion) with most of the increase coming from personal current taxes, which increased by 16.6 percent.
Federal excise taxes only rose by a mere 1.7 percent, which is largely due to the fact that high gas prices led to lower-than-average growth in gasoline consumption.
Federal tax receipts on corporate income, which is typically the most volatile variable took the biggest jump of any category as they rose by over 40 percent last year.
On the spending side, government expenditures rose by about 7.0 percent, which is less than the revenue growth rate, but because we have had a deficit last year, the fact that receipt growth exceeded expenditure growth merely implies that the deficit is lower this year than last year. We still had a deficit in 2005 of about $323 billion. (This is negative government savings, which comes from current receipts. Total receipts and total expenditures, which add in other variables like capital transfer payments/receipts, means that the federal government was forced to borrow $376.4 billion last year.)
State/Local GovernmentsAt the state and local level, overall government current receipts increased by 6.8 percent. There was an 8.7 percent increase in tax receipts, including an 11.1 percent growth in personal current tax receipts, which are predominantly state/local income taxes. Note that state/local income taxes make up a relatively small percentage of total state/local revenue (about 15 percent) compared to the federal government where income tax revenue is the main source.
Sales taxes and property taxes grew at rates of 5.9 percent and 5.8 percent, respectively.
And although they make up a relatively small fraction of state/local government revenues, corporate income tax revenue rose by 41 percent at the state/local level, which is similar to the large increase that we saw at the federal level.
Overall In summary, fueled by rising tax revenue from corporate income and personal taxes, government current revenues in the United States rose by nearly 11 percent in 2005, while government current expenditures rose by about 6.5 percent, leading to smaller deficits (yet still growing debts) in overall government finances.
(Data from BEA NIPA Tables 3.1, 3.2, and 3.3.)