“There are two ways a nation can use economic growth to reduce budget deficits. The first method is to participate in economic growth, with a growing economy increasing tax collections. A second method is to raise taxes so drastically that they consume all economic growth.
The United States government recently announced it has some great news - a fast moving economic recovery is slashing the size of the deficit.
The real economy (if we accept official US government inflation rates) grew by only 6.7% over three years, while the federal government’s real take of that economy rose by a remarkable 21.9%. Because 6.7% in economic growth is only equal to 31% of the total 21.9% increase in tax revenues, this means that economic growth only accounted for 31% of real tax growth, while it was the increase in tax rates that generated the other 69%.
So while the reduction in deficit is being presented as increased revenues from a surging economy, in fact more than 2/3 of the growth in tax receipts was simply from raising taxes.”
http://danielamerman.com/articles/2014/RealDefC.html
So while the reduction in deficit is being presented as increased revenues from a surging economy, in fact more than 2/3 of the growth in tax receipts was simply from raising taxes.”
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I don’t know what deficit reduction was prior to 2012-2013 but in that year the deficit fell from 1 trillion to about 680 billion.
My understanding was that 100 billion of that came from tax increases, 100 billion came from increased stock market revenues, 100 billion came from increased fracking related oil/gas revenues.
This year the deficit is slated to decrease another 200 billion. I think from equal parts increased fracking related oil/gas revenues and increased stock market revenues.