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This is a very important place where cash accounting and accrual accounting differ, and a lesson in why it matters. Tax receipts went up because people paid up
by ThrustVectoring 5y ago
This is a very important place where cash accounting and accrual accounting differ, and a lesson in why it matters. Tax receipts went up because people paid up deferred tax liabilities - they took advantage of lower rates to pay taxes now rather than at a presumably higher rate in the future.
If you get paid $300 today to settle a $600 debt due next year, you haven't made yourself richer. You've essentially sold an asset at a discount.
- adam_arthur 5y agoThat doesn't appear in the data though. Surely some portion of that behavior played into the numbers, but tax receipts basically just stalled for one year, and then continued on their normal growth trajectory. If the effect were large, you would expect a decline in revenues in subsequent years.
- tobylane 5y agoOr a decrease in the previous years. With how predictable US politics is, I would expect accountants to suggest holding these things until a Republican government, which will be no more than 8 years away. But looking back or forward there’s also the other effects of government on their income to confound spotting it.