In a letter published Nov. 6, Stephen Maseda accused Thomas Oatway of making inaccurate assertions that the 2017 tax cuts resulted in a “whopper of a revenue shortfall.” Maseda cites a Congressional Budget Office report estimating that revenue collected in 2021 will be $4.047 trillion. Right-wing media was attracted to this report and compared the estimate to the 2021 estimate contained in the CBO’s June 2017 study of projected tax revenue. That study projected 2021 collections to be $4.011 trillion. Because the 2017 study was completed before the tax cuts, presumably it was the government’s best estimate of tax revenue that would have been collected in 2021 had the 2017 tax cuts not been enacted.
Since actual 2021 tax collections (after the 2017 cuts) exceeded estimated revenue without the cuts, right-wing media claims those cuts did not adversely affect tax collections. Mr. Maseda incorporated this reasoning when he wrote his letter. Unfortunately, this analysis considers only the facts supporting the conclusion. That conclusion may not be fully supportable. Coincidentally, I am working on a series of columns about taxes and I have reviewed numerous reports by the CBO, the Joint Committee on Taxation and the Treasury Department, including the one to which Maseda refers.
The 2017 CBO report cited by Maseda estimated 2018-2021 tax collections would amount to $15.082 trillion. Actual collections (including the estimated amount for 2021) were $14.258 trillion, $824 billion less than the estimate. You can decide whether $824 billion rises to the level of a “whopper of a revenue shortfall.”
In fairness to Mr. Maseda, the pandemic played havoc with collections and the CBO clearly did not anticipate the impact of the pandemic in its 2017 report. So let’s compare the CBO estimates with results for 2018 and 2019 during a pre-pandemic period when the economy was booming beyond what the CBO projected.
The CBO projected 2018-19 tax collections to be $7.218 trillion before the 2017 tax cuts. The actual collections for those years amounted to only $6.791 trillion, resulting in a $427 billion shortfall. Irrespective of the pandemic, between 2018 and 2021, actual average annual revenues were $200 billion below the 2017 projection.
Perhaps our government’s annual spending and the resulting deficits in the trillions makes $200 billion/year seem a small or trivial amount, but it certainly will buy a lot of Whoppers.
To paraphrase what Fox News used to say, “Here’s the report, you decide.”
Jim de Bree