![]() ![]() One likely explanation is that corporate profit margins have fallen faster than expected. Uncertainty around the corporate receipts gap is higher, but PWBM’s estimates point to a persistent corporate receipts gap since the first quarterly payment of the fiscal year in December. Expected receipts are the amounts consistent with CBO’s February 2023 projections for total receipts in 2023, given the expected timing of tax payments over the fiscal year.Ĭorporate income taxes: This tax receipts gap is driven by the timing of quarterly estimated tax payments, when businesses pay installments on their annual tax liability. The tax receipts gap in a given week is the difference between cumulative tax receipts since the start of the fiscal year and cumulative receipts expected by that point of the year. The shaded areas show prediction intervals at a 90% confidence level. Source: Penn Wharton Budget Model using data or projections from the Treasury Department and Congressional Budget Office. 4 Tax payments outside the filing season are usually regular and stable, so it is unlikely that higher-than-expected receipts later in 2023 will offset the shortfall accumulated in April. Moreover, uncertainty around the gap diminishes after the April tax filing season because the tax filing season drives most of the uncertainty about total receipts over the full fiscal year. Individual and payroll taxes: The $117 billion gap in individual and payroll receipts at the end of April is far outside of the 90 percent confidence interval. (See the appendix for a description of how the receipts gap and uncertainty are estimated.) Figure 2 shows that by the end of April 2023, the 90% uncertainty intervals no longer include zero for most receipts. If the shaded area does not include zero, it means that realized tax receipts are outside the normal amount of uncertainty consistent with the projected values. If realized tax receipts are statistically consistent with their projected values, then the shaded interval around the gap between the two will include zero. 3 That means there is some uncertainty around estimates of the tax receipts gap.įigure 2 plots the receipts gap in 2023 for each major tax category (solid line) along with prediction intervals that show the degree of uncertainty at a 90% confidence level (shaded areas). The tax receipts gap depends on the timing of tax payments over the fiscal year, which is largely predictable but does vary from year to year. ![]()
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