Tax Revenues Lowering Estimated Size of 2006 Federal Deficit

By: Martin Lukac
Submitted: 2007-01-17 16:17:15
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The Congressional Budget Office has lowered the estimated size of the US federal deficit for fiscal year 2006. The decrease in the expected deficit is largely a result of high tax revenues.

The Congressional Budget Office is a non-partisan arm of the US Congress. The office projects a $260 billion deficit for fiscal year 2006, a decrease of $111 billion from the March projection.

The deficit would be 2.0% of the gross domestic product -- coming in as the smallest recorded deficit in the past three years.

Currently, the federal government is running a deficit of around $239 billion, according to the CBO estimates. That estimates puts the government $64 billion behind last year's deficit at 10 months.

Spening in June was slightly lower than expected. The Treasury recorded a surplus of $20 billion in June, $1 billion lower than the CBO estimated for the month.

Total reciepts for the first 10 months of the fiscal year are around $223 billion higher, a gain of 12.8%. Individual income tax receipts grew by 14.5% and accounted for $110 billion of the increase. Social insurance tax receipts grew by $42 billion.

Corporate income tax receipts showed an increase of 27%, accounting for $56 billion of the gain. The growth rate of corporate receipts has slowed in recent months, indicating a slowdown in profit growths. However, corporate tax receipts have increased steadily for three consecutive years. The CBO predicts that in 2006, corporate tax receipts will be two and a half times the amount collected in 2003.

Total revenues are expected to be $99 billion higher this year than estimated in March.

Senate Majority Leader Bill Frist (R-Tenn) says that the latest estimates show that President Bush's tax and spending policies are working.

"The CBO deficit estimate, just released, highlights the efforts that have been taken to significantly reduce this year's deficit," he explained. "Strong revenue growth and spending restraint played a vital role in reduction of the deficit to $260 billion."

"This new estimate, which is nearly $80 billion below the agency's estimate last winter, highlights the combined benefits of a strong, resilient economy working in tandem with Republican policies to restrain both taxes and spending."

Martin Lukac represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate and mortgage rates. We specialize in daily updates, mortgage news, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!

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