By Alan Beaulieu – ITR Economics
Federal Revenue
The US federal government collected $1.86 trillion this fiscal year to date, otherwise known as February (the fiscal year is October 1, 2023, to September 30, 2024). That is an increase of $121 billion over the same period last fiscal year. That sounds encouraging until you find out that federal spending in the same time period increased by $227 billion.
Tax season is upon us, so it seems a suitable time to look at the sources of federal revenue. The simple answer is taxes. The following three sources account for 95.1% of all federal revenue. The dollar amounts illustrate revenues for the fiscal year to date.
Our projection of a tight labor market and the attendant increase in wages through the rest of this decade bode well for increasing federal revenue over the next five tax seasons (not counting the 2024 tax season). A problem is that we are likely to see spending go up at an even faster pace. Our projection of a depression in the 2030s places federal revenue, and thus the federal government’s ability to spend, in serious jeopardy. Layoffs, wage cuts, and wage freezes will reduce federal revenue at a time when increased spending (i.e., stimulus spending) is needed.
Federal Spending
The federal government has spent $2.68 trillion this fiscal year to date. That is $820 billion more than it collected in revenue. The following list comprises 75% of all federal spending through February 2024.