CBO Lowers Estimate of US Tax Revenue

April 21, 2014 Taxation in USA

US BudgetWASHINGTON D.C. – The Obama administration may be overestimating the tax revenues it will collect in the near future, and, as a result, the budget deficit over the next 10 years could be as much as USD 1.7 trillion higher than expected.

The proposed tax changes in the national budget plan, submitted by the Obama administration to Congress in March, will increase tax revenues and lower the national deficit, but not by as much as currently projected, according to a new report released late last week the Congressional Budget Office (CBO).

In its report the CBO showed that the measures set out in the plan would result in a cumulative budget deficit of USD 6.6 trillion over the next 10 years, approximately USD 1.7 trillion higher than the forecast in the original budget plan submitted by the administration.

The CBO pointed out that the revenue projections are based on overly optimistic forecasts for national economic growth, and while tax revenues will rise in the coming years, it is unlikely that they will reach the same levels as expected by the government.

The CBO also noted that the deficit and tax revenue may differ even further still, as the new budget plan is based on the assumption that a number of controversial new tax measures will be passed over the next 12 months, including tax breaks for low income families, more funding for job training programs, the enactment of major immigration reforms, extra hikes to taxes on tobacco products, the restoration of estate taxes, and the imposition of a new tax on wealthy individuals.

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