In an article on the Wall Street Journal, Damian Paletta reports that the federal budget deficit is slowly shrinking as corporate and individual income taxes rise due to the improving economy:
Individual income-tax revenue from October through March, the first half of the government’s 2012 fiscal year, hit $484.1 billion, up from $475.6 billion in the year-earlier period. Corporate income taxes rose to $84.5 billion from $55.1 billion a year earlier. The higher tax revenue helped shrink the six-month deficit to $778.8 billion this year, $50 billion lower than the year before.
However, monthly tax data can fluctuate considerably and the deficit could grow again if the economic recovery loses steam.
April’s numbers will be a big factor in measuring the health of the economy, once most Americans file their income tax returns:
“The big news will be when the income taxes settle down, and that will be when the envelopes are opened at the end of April and beginning of May,” said Joseph Minarik, research director at the Committee for Economic Development who served as chief economist at the Office of Management and Budget during the Clinton administration.
To continue reading this article on the WSJ click here.