Posted on 07/17/2009 9:40:12 AM PDT by FromLori
Each business day, the United States Treasury Department publishes a report on the workings of the government’s income and spending. One of the items on this report is the “Withheld Income and Employment Taxes.” (Here in the USA, workers have taxes automatically deducted from each paycheck.) This project charts this data.
Current through the Daily Treasury Statement dated July 15, 2009.
YIKES!! Get this over to Denninger, this is right up his alley. I did some comparison on this with the DOW. When this chart dipped so did the DOW in 2002.
If we wanted true freedom from taxes and tax tyranny we would outlaw automatic withholding, then overnight the entire middle class would become fiscal conservatives.
Not quite overnight, it would happen sometime between the middle of January and April 15th.
Unemployment chart should correlate nicely to that chart...
He has a market ticker forum you can post on..
http://www.tickerforum.org/cgi-ticker/akcs-www?forum=Ticker
Us self employed people get nailed quarterly. Hate putting aside 25%+ of my income knowing it’s not for savings, it’s to pay the Fed.
Ping
I assume you were a member of his thread since you often post on FR about his writings. That is what I get for assuming.
Thanks! That’s great information and is making into my Economic Update email today.
Milton Friedman said that withholding payroll taxes was one of the ideas he regretted the most. Government thought it was a great idea.
Obama’s stimulus was a small reduction in payroll deductions. Not a reduction in taxes due, just the amount they withheld. This didn’t cause the bottom to fall out of the withholding shown on the chart though.
I heard it was about $40 to $50 a month?
Since the vast majority of the 140 million Americans in the workforce have LESS ability to defer or avoid taxes than Corporations or investors, this metric actually UNDERSTATES the contraction of the U.S. economy this year.
In 2009, U.S. GDP may well contract by 10-12%. If Douglas Elmendorf, Director of the Congressional Budget Office, is correct in stating that Federal spending is unsustainable now (and I agree with him), by January the U.S. economy may find itself in the economic equivalent of what aviators refer to as being “behind the power curve,” “under the anvil” (rotary wing), or in a “death spiral.” It doesn't matter what control inputs you make, including neutralizing and doing nothing, the situation is not recoverable.
The “National Income Identity” is not a true mathematical identity. We are about to get hard proof that despite the equal sign (which is more of an accounting convention for double-entry book keeping and slightly less valid than “goodwill”) a dollar of government spending is NOT the same as a dollar of consumer spending, or private investment.
We are about to get dramatic (and probably irrevocable) proof that the sign of the “multiplier effect” for a dollar of government spending is OPPOSITE the sign of the multiplier effect for consumption or private investment. The reality is that a dollar of government spending has a much higher probability of reducing our GDP than the probability of growing GDP associated with a dollar of private investment or consumption.
Finally, since government accounting is based on cash flow vice accrual methods, the government cannot make an “investment.” It can however run up massive amounts of deficits, debts, and liabilities.
I’ll bet when you have a family emergency and have to dip into that 25% the government isn’t very compassionate about it.
You’re welcome Politicket.:)
(See post #14 too. It’s a good one.)
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