Feds’ 2013 tax haul will be biggest ever

The federal government is projected to collect more revenue in 2013 than ever before, a statistic Republicans are touting to make the case that the government has a spending problem, not a taxing one.

Top GOP lawmakers, from Speaker John Boehner (R-Ohio) on down, have made that pitch while noting that the Congressional Budget Office (CBO) projects the revenue flowing to the government will double between 2012 and  2023. 

{mosads}The statistics are getting heavy play from Republicans, who argue that an overhaul of the tax code should not include more revenues.

“We’re going to get more revenue in the federal government than we’ve ever seen — by twice,” House Ways and Means Committee Chairman Dave Camp (R-Mich.) told reporters last week. “So I don’t think revenue’s the issue.”

Democratic leaders and economists say that GOP line isn’t the whole story, because the raw number of dollars the government collects doesn’t account for inflation and population growth. 

“There are lots and lots of reasons why you would expect that number to get bigger without changing the way the world works,” Roberton Williams of the Urban-Brookings Tax Policy Center told The Hill. 

The more telling statistic, analysts say, is revenues as a share of the economy. On that basis, federal revenues are running in the neighborhood of the 40-year average. 

Democrats and Republicans are sparring over taxes at a time when polling has found that people in the U.S. are growing less confident that the income taxes they pay are fair. A Gallup poll released Monday found that 55 percent of people believe they’re paying the right amount — the lowest in 12 years.

Republicans say tax reform is needed for both individuals and businesses, and argue that any rewrite of the code should be revenue-neutral — meaning, on the whole, the government would bring in the same amount of money.

Democrats, meanwhile, are pushing for tax reform to bring in more money to the government, even if they are somewhat divided over how much the government should collect.

Both the CBO and the White House estimate the government will collect around $2.7 trillion in 2013, up from around $2.45 trillion last year. 

If the estimates prove true, revenues would top the previous nominal high set in 2007, the last full year before the financial crisis began. Revenue as a percentage of gross domestic product (GDP) would rise from 15.8 percent in 2012 to roughly 19 percent in 2015. 

Federal revenue as a percentage of GDP will hover at around 19 percent from 2015 until 2023, CBO estimates, with nominal revenues approaching $5 trillion that last year. 

Revenues as a percentage of the economy have averaged around 18 percent over the past four decades, reaching a high of almost 21 percent late in former President Clinton’s administration. Revenues hovered at around 15 percent of GDP in 2009, 2010 and 2011, according to CBO.

The Tax Policy Center’s Williams and the CBO say that the increase in revenues as a share of GDP will be spurred by the growth of the economy, as well as from tax increases connected to the “fiscal cliff” deal and the Democratic healthcare reform law. 

“The appropriate way to think about it is: What do we want government to do for us, how much is it going to cost to do that, and how are we going to pay for it?” said Williams, who added that both parties have been able to “cherry pick which numbers are going to support their case.”

House Budget Committee Chairman Paul Ryan’s (R-Wis.) latest framework incorporated the revenues from the fiscal-cliff deal and projected 2023 revenues to be 19.1 percent — the same as the CBO estimate. 

While that’s higher than the tenth-year projection in either of the last two Ryan budgets, it’s below the 19.8 percent estimated in the Senate Democratic budget. 

Congressional Democrats — even those who have reservations about the Senate budget resolution — say the revenue figure should be pushed higher.  

“As more baby boomers retire, we need revenues above historical averages to deal with the demographic reality,” Senate Finance Committee Chairman Max Baucus (D-Mont.), who voted against the Senate Democratic budget, said late last year before the fiscal-cliff deal. 

Others in the party have cited President Obama’s low tax rate last year as evidence that change is needed. The president and first lady Michelle Obama paid an effective rate of 18 percent, reducing their bill with deductions for mortgage interest, charitable contributions and other tax breaks. The couple’s adjusted gross income for the year was more than $600,000.

“We can’t collect 18 percent from people making that much money and be able to afford to build roads and bridges and educate kids and do the medical research we used to,” Sen. Chris Murphy (D-Conn.) said Monday morning on MSNBC.