As companies wait to see what Congress will do in the coming months, the resultant decrease in corporate tax revenues is likely to have a negative effect on the U.S. budget picture.
The U.S. budget deficit for the fiscal year ending Sept. 30, 2014 is predicted to be $506 billion, an almost 3 percent increase from the level of $492 billion predicted in April, according to a report from the non-partisan Congressional Budget Office cited by Reuters. This $14 billion increase in the deficit is more than accounted for by a $36 billion decrease in the estimated level of revenue coming from corporate tax payments. The currently anticipated level is $315 billion, down from an estimated $351 billion in April.
CBO officials said that the larger budget deficit stems from companies that are deferring tax payments while they wait on Congress, which is expected to vote on whether it will extend a number of expired tax breaks, according to the news source. These extenders cover an extremely broad range of activities, including renewable energy, school teachers' expenses, multinational corporate finances and even Puerto Rican rum.
The anticipated deficit is considerably lower than those in recent years, marking a significant decrease from the previous fiscal year's $680 billion, according to The New York Times. This year also marks the fifth consecutive decrease in the federal budget deficit as a share of the U.S. gross domestic product. In the 2009 fiscal year, the deficit represented 9.8 percent of the GDP - much higher than the 2.9 percent slated for this fiscal year and below the average deficit of 3.1 percent of the GDP over the last four decades.
The U.S. budget deficit is expected to remain below 3 percent of the GDP through 2018, but then rise to almost 4 percent in 2022 as spending outpaces revenues, according to Reuters.
If this post has furthered your curiousity about the current state of the U.S. Budget, check out my previous post on the subject:
- GOP Budget To Pass House
- White House Budget Takes $276 Billion From Multinationals
- IRS Budget for 2014 Focuses on Increasing Manpower to Ensure Tax Compliance