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:
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
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