Corporate Income Taxes Down 22% In First 4 Months of Fiscal 2019

By Terence P. Jeffrey | March 7, 2019 | 3:54 PM EST

President Trump, Senate Majority Leader McConnell, Vice President Pence and Speaker Ryan celebrate passage of the Tax Cuts and Jobs Act, Dec. 20, 2017. (Getty Images/Chip Somodevilla)

(CNSNews.com) - Federal revenues from corporate income taxes were down by 50.67 percent this January compared to last January and were down 21.96 percent in the first four months of fiscal 2019 (October through January) compared to the first four months of fiscal 2018, according to the Monthly Treasury Statement released this week.

In January 2018, according to Table 3 in the Treasury statement for that month, the federal government collected $13,482,000,000 in corporation income taxes. Adjusted for inflation using the the Bureau of Labor Statistics inflation calculator, that equals $13,691,140,000 in constant January 2019 dollars. In January 2019, according to Table 3 in the new Treasury statement released this week, the Treasury collected $6,754,000,000 in corporation income taxes.

The $6,754,000,000 in corporation income taxes the Treasury collected in January of this year is the smallest amount it has collected in January in seven years. The last time the Treasury collected less than that in corporation income taxes in January was 2012, when it brought in $5,051,670,000 (in constant January 2019 dollars).

In the first four months of fiscal 2019 (October through January), according to the Monthly Treasury Statements, the Treasury collected a total of $59,863,000,000 in corporation income taxes. That was down $16,841,690,000—or 21.96 percent—from the $76,704,690,000 (in constant January 2019 dollars) that it collected in October through January of fiscal 2018.

In those same initial four months of fiscal 2019 (October through January), according to the Monthly Treasury Statements, individual income tax revenues and total federal tax revenues also declined compared to last fiscal year. But they did not drop nearly as much as the corporate income tax revenues.

Real October-through-January individual income tax revenues were down 6.89 percent (from $612,075,700,000 in constant January 2019 dollars in fiscal 2018 to $569,931,000,000 in fiscal 2019); and real total federal tax revenues were down 3.21 percent (from $1,148,087,490,000 in constant January 2019 dollars in fiscal 2018 to $1,111,217,000,000 in fiscal 2019).

CNSNews.com asked the Treasury whether the partial shutdown of the federal government--which ran from Dec. 22, 2018 to Jan. 25, 2019--effected the total tax revenues reported for January and why the corporate income tax revenues for January 2018 were so disproportionately high and why the corporate income tax revenues for January 2019 were so disproportionately low.

A Treasury official indicated that one reason for a disparity between individual income tax revenues this January and last January is that after the Tax Cuts and Jobs Act was signed in December 2017 employers were not required to adjust the taxes they withheld from employees’ paychecks until February 15. Thus, in January 2018, employees were still having their taxes withheld at pre-TCJA levels.

The TCJA, as the Tax Foundation notes, cut the corporate income tax rate from 35 percent to 21 percent. But it also, on the corporate side, allowed immediate and complete expensing of some capital expenditures.

As the IRS pointed out in an explanation of the TCJA, it included “temporary 100 percent expensing for certain business assets (first-year bonus depreciation.)”

“The 100 percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property,” said the IRS. “Machinery, equipment, computers, appliances and furniture generally qualify. The law also allows expensing for certain film, television, and live theatrical productions, and used qualified property with certain restrictions. The deduction applies to business property acquired after Sept. 27, 2017, and placed in service after Sept. 27, 2017, and before Jan. 1, 2023.”

“For individual withheld taxes,” a Treasury official told CNSNews.com, “lower withholding rates to account for the lower tax rates were not required to be implemented until Feb 15. So, that means looking at FYTD 18 v FYTD 19 is not an apples-to-apples comparison, and it will not be until March MTS.”

“For corporate taxes,” the Treasury official said, “Treasury has always been clear that the costs of TCJA are frontloaded by immediate expensing and other such items.”

The $1,111,217,000,000 that the Treasury collected in total tax revenues in the first four months of this fiscal year was lower than the amount it collected (in constant January 2019 dollars) in the comparable periods of the last four fiscal years. The last time, the Treasury collected less than $1,111,217,000,000 in total tax revenues in the first four months of the fiscal year was fiscal 2014, when it collected $1,033,678,940,000.

Last year, fiscal 2018, set the all-time record for total tax revenues collected in the first four months of the fiscal year ($1,148,087,490,00 in constant January 2019 dollars).

The $569,931,000,000 in individual income taxes the Treasury collected in the first four months of this fiscal year was the lowest in three years. The last time that individual income tax collections in the first four months of the fiscal year was lower was in fiscal 2016, when the Treasury collected $566,066,200,000 in individual income taxes from October through January.

Last year, fiscal 2018, set the all-time record for individual income tax collections in the first four months of the fiscal year with the Treasury taking in $612,075,700,000.

The $59,863,000,000 in corporation income taxes the Treasury collected in the first four months of this fiscal year was the lowest level in eight years. The last time the Treasury collected less was fiscal 2011, when it brought in $45,235,990,000.

Fiscal 2007 set the record for corporation income tax revenues in the first four months of the fiscal year. That fiscal year the Treasury collected $136,428,560,000 in corporation income taxes (in constant January 2019 dollars) in the October through January period.

(The $13,691,140,000 in corporation income taxes--in constant January 2019 dollars--that the Treasury brought in during January 2018 was the all-time record. It exceeded by a narrow 0.85 percent the $13,574,460,000 that the Treasury collected in January 2007.)

While taking in $1,111,217,000,000 in total taxes this October through January, the federal government spent $1,421,467,000,000. Thus, it ran a deficit of $310,250,000,000 in the first four months of fiscal 2019.

In addition to the $569,931,000,000 in individual income taxes and $59,863,000,000 in corporate income taxes the Treasury collected in the initial four months of this fiscal year, it also collected $389,183,000,000 in Social Security and other retirement taxes, $36,204,000,000 in excise taxes, $24,455,000,000 in customs duties, $6,126,000,000 in estate and gift taxes, and $25,458,000,000 in miscellaneous receipts.

(The amounts for the historical tax numbers cited in this story were converted into constant January 2019 dollars using the Bureau of Labor Statistics inflation calculator.)

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