Increasing Tax Receipts Sign of Growing Economy

May 5, 2005

Increased tax receipts are one sign that an economy is growing. Today the Treasury Department announced that recent tax receipts were larger than anticipated. The Washington Post reports in a May 5 article by Jonathan Weisman: “After three years of rising federal budget deficits, a surge of April tax receipts brought unexpected good news to fiscal policymakers — the tide of government red ink appears to be receding”.

This news paints a good-news bad-news scenario. The good news is that increases in tax receipts mean income is growing. Simply stated, Americans are earning more income. But the bad-news is that due to the progressive income tax, Americans are also paying more in taxes. Learn more about how income growth and the progressive tax code interact in the Tax Foundation’s Special Report #134: America Celebrates Tax Freedom Day.


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