July 2018 CBO Monthly Budget Review: Revenues Up 1%, Outlays Up 7%

from the Congressional Budget Office

The federal budget deficit was $895 billion for the first 11 months of fiscal year 2018, the Congressional Budget Office estimates, $222 billion more than the shortfall recorded during the same period last year. Revenues were 1 percent higher than in the same period in fiscal year 2017, but outlays rose by about 7 percent.

As was the case last year, this year’s outlays were affected by shifts in the timing of certain payments that otherwise would have been due on a weekend or a holiday. If not for those shifts, the increase in the deficit would have been smaller: The deficit for the 11-month period would have been $154 billion larger than last year’s amount. Excluding the effects of those timing shifts, the increase in outlays was 4.7 percent, and about one-quarter of the increase was for interest on the public debt.

CBO expects that the deficit, receipts, and outlays for fiscal year 2018 will be largely consistent with amounts in its adjusted April baseline, which were reported in An Analysis of the President’s 2019 Budget in May 2018.

Total Receipts: Up by 1 Percent in the First 11 Months of Fiscal Year 2018

Receipts totaled $2,985 billion during the first 11 months of fiscal year 2018, CBO estimates—$19 billion more than during the same period last year. The changes between last year and this year were as follows:

Individual income and payroll (social insurance) taxes together rose by $105 billion (or 4 percent).

Amounts withheld from workers’ paychecks rose by $32 billion (or 1 percent). That change largely reflects increases in wages and salaries that were partly offset beginning in February by a decline in the share of income withheld for taxes. In January, the Internal Revenue Service issued new withholding tables to reflect changes made by last year’s major tax legislation (Public Law 115-97) that took effect at the beginning of the current calendar year. All employers were required to begin using the new tables by February 15, 2018.
Nonwithheld payments of income and payroll taxes rose by $80 billion (or 16 percent). Most of that increase occurred in April, when taxpayers made their final payments of taxes for 2017.
Individual income tax refunds rose by $6 billion (or 2 percent), reducing net receipts.

Corporate income tax receipts fell by $71 billion (or 30 percent), reflecting payments for the 2017 and 2018 tax years. About one-third of the decline occurred in June. Collections in June were mostly estimated payments for tax year 2018, when several provisions of P.L. 115-97 took effect, including the new lower corporate tax rate and the expanded ability to immediately deduct the full value of equipment purchases.

Revenues from other sources fell by $16 billion (or 6 percent). Declines in revenues from fees and fines and remittances from the Federal Reserve were partly offset by higher receipts from excise taxes and customs duties.