Treasury data show that through April 17, individual income and payroll tax receipts totaled $889 billion, 5 percent below the $932 billion figure for the corresponding period in 2019. Corporate tax receipts totaled $32 billion for the same period, a 56 percent drop from the $73 billion collected for the corresponding period in 2019.
These figures mask the depth of the recent decline. Through February, individual income and payroll tax receipts were 11 percent above 2019 collections. If that trend had continued, individual income and payroll tax receipts on April 17 would have been $1.034 trillion. That means the U.S. treasury’s individual and payroll tax receipts are about $145 billion less than what might have reasonably been expected. Figure 1 shows how the shortfall began in late March and accelerated in April, when individual income tax payments would have been due.
Corporate tax receipts in January and February of this year were 26 percent above January and February 2019 collections. If that trend had continued, individual and payroll tax receipts on April 17 would have been $92 billion. That means the U.S. treasury’s individual and payroll tax receipts are about $60 billion less than what might have reasonably been expected. Figure 2 shows that shortfall was concentrated over the last week, when corporate payments would have been due.
These massive shortfalls are attributable to a combination of two factors. The first is postponement of tax payments. The IRS in Notice 2020-17, 2020-15 IRB 590, postponed the due date for individual and corporate income tax payments from April 15 to July 15. Except for taxpayers receiving Paycheck Protection Program loan forgiveness, the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) delayed the employer portion of FICA taxes and one-half of self-employment taxes until 2021 and 2022.
The second factor contributing to the shortfall is the huge contraction of the U.S. economy. Over the four-week period ending April 11, about 22 million Americans applied for unemployment insurance claims, increasing the unemployment rate from 3.5 percent to 16.8 percent. From its peak of 29,551 on February 12, the Dow Jones Industrial Average declined by 37 percent to 18,591 on March 23. On March 13 President Trump announced a national emergency in response to the coronavirus outbreak.
It isn’t possible to disentangle the effects of these revenue-shrinking factors. But it seems clear that unless Congress or Treasury acts, postponed taxes in the neighborhood of $100 billion will be due on July 15 even if the economy is still in dire straits.