Patriot News Alerts
"U.S. government reports record tax haul after Trump tax cuts spur economic growth."

Patriot News Alerts on Tuesday, August 14th, 2018 in a web post

Mostly False

Did the U.S. have a record tax haul after Trump tax cuts spurred economic growth?

The exterior of the Internal Revenue Service building. (AP/Susan Walsh)

One of President Donald Trump’s favorite talking points is to tout the economic impact of the tax cut bill he signed into law last December. Web posts at friendly outlets have taken up the rallying cry.

One of those sites was Patriot News Alerts, a site that says it opposes "the Deep State, the liberal media, social-justice Hollywood, leftist colleges."

One post was headlined, "U.S. government reports record tax haul after Trump tax cuts spur economic growth."

This story was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Facebook.)

We found that the story is pegged to a real number, but not a number that holds up well to close scrutiny. (Our inquiry to the website was not answered.)

The underlying data point is "very misleading," said Patrick Newton, a spokesman for the Committee for a Responsible Federal Budget.

The body of the Patriot News Alerts article said, "For the first 10 months of the 2018 fiscal year, the federal government has collected a record amount of income and corporate taxes. … As Trump promised, more people are going back to work. That being the case, the government is collecting more money in income taxes from citizens."

This number comes from the most recent monthly Treasury report through July 2018. The report organizes its data based on the fiscal year, so the 2018 numbers include 10 months -- from October 2017 to July 2018.

According to the report, individual income tax receipts were up by 7.8 percent compared to the equivalent 10-month period in 2017. So that provides some support for the claim.

But the same Treasury report shows that corporate taxes were down during the first 10 months of the fiscal year. In fact, they were down by 28.5 percent -- a whopping plunge, but not a surprising one, given the sweeping corporate tax cuts included in the new law.

Total receipts, which include individual and corporate income taxes as well as estate taxes, excise taxes, and tariff duties, were up between the first 10 months of 2017 and the first 10 months of 2018. The rise was modest -- less than 1 percent -- but it was an increase.

Still, there are several other concerns undermine the significance of the finding.

A rise in tax collections is to be expected every year, barring a recession

Every year, the U.S. population grows, and -- except during a recession -- the size of the economy grows, too. "So you’d expect receipts to be higher every year, all other things equal," said Benjamin R. Page, a senior fellow at the Urban Institute-Brookings Institution Tax Policy Center.

We compiled a chart showing the year-to-year changes in receipts from individual income taxes (in blue), corporate taxes (in red), and all other receipts (in yellow). The data, from 2008 to 2018, comes from the archive of monthly Treasury reports and includes only the first 10 months of the fiscal year, in order to keep it comparable to the data cited in the articles we’re checking.

The chart shows that receipts sagged during the recession years of 2009 and 2010 but have otherwise risen steadily.

If you look at the data in a more useful way -- the percentage increases from year to year, rather than the raw dollars taken in -- the chart shows that other years have exceeded Trump’s 10-month performance between 2017-18. Three times, President Barack Obama presided over double-digit annual increases in individual tax receipts: up 23.8 percent between 2010-11, up 17.4 percent between 2012-13, and up 11.6 percent between 2014-15.

It’s not clear that the Trump tax cuts caused the increase in tax collections

If you look at when the tax bill passed, it’s not clear at all that an increase in tax receipts followed the bill’s passage. Because the Treasury report also includes month-by-month data, it’s possible to drill down to measure trends during more specific time periods.

For the three months of fiscal 2018 prior to the tax cut, individual income tax collections rose by 10.8 percent over the equivalent period from 2017. But the rise for the seven months after the tax cut was 6.7 percent.

And if you look at total tax collections from every category, rather than just individual income taxes, the picture is even worse. During the seven-month period after the tax bill passed, total receipts actually fell slightly compared to the equivalent period in 2017, by about a tenth of a percentage point.

Perhaps the most revealing comparison takes in the May-to-July period, because it excludes the spike in payments in April, when most Americans pay taxes on income generated in 2017, before the tax law was passed. During that period, individual income tax collections fell by about 1 percent compared to 2017.

"I don’t have a great story for why individual receipts are up so much, but I don’t think it means what Patriot News Alerts thinks it means," Page said.

Our ruling

Patriot News Alerts said, "U.S. government reports record tax haul after Trump tax cuts spur economic growth."

One notable category of tax receipts, individual income taxes, did rise in fiscal 2018, and total tax receipts rose by a smaller amount. But the closer you look, the less meaningful these statistics become.

In particular, the data doesn’t provide support for the idea that the Trump tax bill juiced tax collections. If you drill down further to periods when the new tax law was in effect, individual income tax receipts actually fell compared to 2017.

We rate the statement Mostly False.

Share the Facts
3
1
7
PolitiFact rating logo PolitiFact Rating:
Mostly False
"U.S. government reports record tax haul after Trump tax cuts spur economic growth."
a web post
Tuesday, August 14, 2018
x

THE FACTS

Delivered to your inbox weekly

x

This donation will make you a Inside Voice member.

For Membership benefits click here