Budget Deficit and Related News

The Congressional Budget Office (CBO) reports that the budget deficit for the first 2/3 of this fiscal year is $929 billion! This is $6 billion less than the comparable period last fiscal year. At this rate, in another 155 years, there will be no deficit! ;-)

A helpful Congressional Research Service (CRS) report from April 2011 explains the deficit and causes and notes that it will slowly decline from $1.4 trillion today to $729 billion in 2021. That is a lot of deficit, increased debt and increased interest expense. (Reducing the Budget Deficit: Tax Policy Options (R41641).)

For years, the IRS has been required to include pie charts in the 1040 instruction booklets. One showing sources of revenues and the other key expenditures. Today, probably very few look at these pie charts because the instruction booklets are not mailed to people, many people use tax prep software or a paid preparer and they are buried in the booklet. So, I will show the revenue charts from the last two instruction booklets. The dollar sign shows the piece of the pie that represents borrowing. In FY 2008 it was a 15% slice and in FY 2009, it was a 40% slice!

Related news:

• The Patriotic Millionaires group reminds Congress that they want to be taxed more - see entertaining video here.
• Congress continues to hold hearings on tax reform - see list here.
• Various government studies have been issued on various aspects of tax reform including one on territorial taxation from the Joint Committee on Taxation and one on charitable giving from the CBO. I'll post more on these reports and others later.

Reducing the deficit will take more than spending reform and the deficit numbers above are without extension of the 2001/2003/2010 tax cuts. So tax reform will also be needed to reduce the deficit, debt and pay interest expense.

What tax reforms do you support?