Payroll Tax Increase Leads to Budget Surplus in January

The Treasury Department reported a budget surplus for the United States government in the month of January, in part because of new revenues from a payroll tax cut that expired on Dec. 31, 2012.

January’s budget surplus is the first one since September 2012 and the first January surplus since 2008. The government spent $269 billion in January and brought in $272 billion, amounting to a $3 billion surplus for the month. Last January’s deficit was $27 billion.

The expiration of the payroll tax cut on the last day of December was responsible for an extra $9 billion in revenues, according to the Congressional Budget Office (CBO).

“Taxes withheld from workers’ paychecks rose by $58 billion (or 10 percent),” the CBO said, “Most of the gains came from a combination of higher wages and salaries and the expiration of the payroll tax cut in January.” Tax payments went up $8 billion compared to last January. This amounted to a $10 billion growth in corporate income tax receipts when combined with the $2 billion less in tax refunds.

Spending cuts in the government were another part of the story in January’s surplus. Defense spending fell by 4 percent ($9 billion) from last year; Freddie Mac and Fanny Mae received $14 billion less, and spending in the “Other Activities” category dropped $10 billion. Spending on unemployment benefits also fell dramatically, by 22 percent ($8 billion).

The government spent $1 billion less in January compared with the last month, and took in over $2 billion more in revenues. Total receipts for January grew from $234 billion in 2012 to $272 billion in 2013.

The $3 billion budget surplus brings the government’s deficit for the fiscal year 2013 down to $290 billion. The fiscal year for the government starts in October. The bulk of this year’s debt came in October and November, when the government spent $292 billion more than its revenue over the two months. The CBO calculated that total federal outlays have been 1 percent higher in the first four months of fiscal 2013 than the same period last year.

[cf]skyword_tracking_tag[/cf]

Please Leave A Comment

comments

Related posts:

Greece Expects Budget Surplus and Economic Growth in 2014 2012 Job Growth Improves in Hindsight, January Sees 157,000 Jobs Florida Governor Rick Scott Vetoes Tuition Increase Spending Cuts, Tax Increases and Uncertainty Will Slow Economic Growth in 2013 Unemployment Rate Drops in January But Hiring Rate Slows