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Economic Analysis: Corporate Tax Nosedive Leads the Plunge in Federal Receipts

Posted on May 13, 2020

Overall federal tax receipts in April were down 55 percent from a year ago, from $536 billion to $242 billion, according to Treasury data released May 12.

Individual income tax receipts declined by 77 percent compared with April 2019. Corporate income tax receipts were down 91 percent. Interestingly, payroll tax receipts managed to grow by 4 percent over April 2019 levels.

These declines are illustrated in figures 1 through 4. The slow growth in revenues is the result of a massive decline in economic activity and a combination of legislative and administrative actions cutting and postponing tax payments.

Before the onset of the COVID-19 pandemic, growth in federal receipts was strong. For example, comparing January 2020 totals with January 2019 totals, there was 10 percent growth in overall receipts, 10 percent growth in individual receipts, 55 percent growth in corporate receipts, and 5 percent growth in social insurance and retirement receipts.

On March 13 President Trump issued an emergency declaration in light of the pandemic. On March 18 Treasury and the IRS issued Notice 2020-17, the first of a series of announcements postponing the due dates for federal tax payments from April 15 to July 15. On March 27 the president signed the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) into law, authorizing nearly $269 billion in economic impact payments to be sent out to individuals in the coming months, as well as $437 billion in other provisions that will reduce federal revenues this year.

The data from Treasury’s Monthly Treasury Statement is published on 2 p.m. of the eighth business day of the following month.

Figure 1. Monthly Overall Federal Tax Receipts, 2018-2020
Figure 2. Monthly Individual Income Tax Receipts, 2018-2020
Figure 3. Monthly Federal Corporation Tax Receipts, 2018-2020
Figure 4. Monthly Federal Payroll Tax Receipts, 2018-20
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