This is a demonstration of how raising tax rates (obamacare, ending '03 cuts, etc.) lowers revenue, and voters calling for hikes on income or import taxes have to understand the consequences..
Posted on 02/19/2016 3:54:04 AM PST by expat_panama
The growth of federal income and employment tax withholdings, the broadest and most timely read on the health of the job market, has been sinking at an alarming rate. For most of 2015, tax withholdings rose at a rate of 5% or more from a year ago, a combination of solid job growth and gains in wages, commissions and other incentive pay.
Revenue inflows to the Treasury Department steadily slowed through the fall...
...Federal Reserve Chair Janet Yellen touted "steady job gains" forecasting that "labor market indicators would continue to strengthen" -- there have been a few indications that things might not be as good as they seemed.
Announced layoffs surged to 75,114 in January, up 42% from January 2015...
...January's employment report showed payroll gains decelerating for a third straight month...
...Tax Data Weaker Than Official Payroll Gains
The official Treasury tax-receipt data -- which don't come with a margin of error and aren't subject to revision -- are obviously at odds with the much more upbeat numbers reported by the Labor Department...
...The slower pace of year-over-year gains in tax withholdings has pointed to a significantly slower pace of hiring since September...
...Could the Fed have been looking at the wrong jobs data when it decided to raise rates in December for the first time in nearly a decade?...
...year-over-year gains in withholding taxes began to weaken in October 2007... ...
...While the Labor Department never made big revisions to reported fourth-quarter job gains in 2007, the government revised down third-quarter gains from 292,000 to just 31,000.
Employment is something of a lagging indicator as it is, so policymakers focused on jobs data that may later be revised substantially are apt to get behind the curve.
(Excerpt) Read more at investors.com ...
This is a demonstration of how raising tax rates (obamacare, ending '03 cuts, etc.) lowers revenue, and voters calling for hikes on income or import taxes have to understand the consequences..
This is why some politicians are lining up behind the $15 minimum wage - all of those payroll tax withholdings will go up. They basically want to increase withholding by having company earnings pass through employee paychecks into state/federal coffers.
It's a Good Morning for the bounce up w/ silver and gold, but for stock indexes it's "aw rats!" Our 3-day rally stalled w/ a percent drop (volume falling so it wasn't what IBD calls a 'distribution' day). Also, stock index futures are still nervous at -0.39 --and they see metals down too a bit -0.21%.
The Labor Dept.'s CPI comes out an hr before opening; it'll be interesting if they want to embarrass Yellen (even more) with deflation. Maybe not, the PPI this week was on the plus side.
More FR Econ threads:
Some may actually think that, but so far that wage hike is just causing lay-offs --more revenue cuts.
Plus people who earn 15 dollars an hour don’t pay any federal income tax.
Oh, I know they are wrong, but they ignore the reality that companies can (and here in NJ often DO) just pick up and move, or down-size their staffs. That is one of the many reasons for NJ’s financial woes.
People making 15 dollars an hour don’t end up paying much in Federal income taxes.
They contribute to Social Security, don’t they? Medicare tax? Unemployment?
It could also reduce the size of their ObamaCare subsidies.
“”They contribute to Social Security, don’t they? Medicare tax? Unemployment?”””
Employees don’t contribute to the unemployment tax. That is paid by the employer.
How much weaker can it get? Everyone in the world out of work?
They don’t end up paying but they have with holding and must file to get it back. So these numbers reflect the decline in the growth of withholding and include the low end of the scale........ I think
I continue to believe that at least one reason for wanting a raise to $15 is to pay for Obamacare and to induce general wage inflation that will sweep the increased costs under the rug. And, the wage inflation will create general inflation that will devalue the debt
“Plus people who earn 15 dollars an hour don’t pay any federal income tax.”
Especially in a part-time, 20 hour-per-week job. Come to think of it, I’ll just stay home and collect welfare! :/
Nothing stays the same and companies are always changing --they either grow, shrink, stay, or move. It's not that more companies are shrinking/moving these days, it's that the ones that don't cease to exist.
BINGO!!!
I am waiting for the posting of Californicator $ales Taxes collected for January 2916 versus last year.
We are not seeing the #/levels of customers shopping as last summer/early fall in the stores and lack of cars
in the parking lot.
One would think with the lowest gas prices in a decade, more people would be shopping and more cars in the shopping parking lots.
You are correct. Also, America has millions of people with instant unemployment degrees and millions with no real education of any level or any skills to make a living.
So they need higher minimum wages for any low skill job to pay for Obamacare and ?????
We are now running out the clock
Will the ‘Rats score with a $15 general minimum wage or will the country elect a Republican (any one of the group) that will end the obamacare game and the need to pay for it
Healthcare, Education and food costs are all way up.
The low gas prices help a little but not nearly enough to make up for the other costs.
The economy can’t recover because not enough consumers have disposable income.
We are in our 70’s and are protected re increased health care costs and education costs.
You are definitely on target there. We have grandkids and grand nieces/nephews in private schools. The demand for private schools has driven the costs up. Like $20,000 per year just to go, not including other costs.
Due to the high deductible for medical office care, some of our younger relatives go to the renta docs offices. They are basically healthy, and they just pay for their care out of pocket. Their expensive ObamaCare policies are in case of hospital stays/needs.
Food wise, the only real increases we have seen is stuff coming from the midwest like butter, eggs, and chickens. The killing of millions of chickens due to bird flu has driven the egg and chicken costs up.
Butter prices are recently, very high, and when it goes on sale, we buy a lot and freeze it.
We buy our steaks, salmon, and other ocean fish fresh or frozen from Costco. Those items are basically the same prices as last year.
When there is a good sale price on household items we will buy a 6-12 month supply. No use keeping money in a low interest savings acct if there is a significant sale savings.
An interesting trend re good organic produce, is the lower price in our major grocery stores. When our local farmers start selling produce, we will be buying from them again.
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