How Government Made an Extra $57 Billion in 2010

The 2010 fiscal year is over, and the federal deficit is only $1.3 trillion. Income tax revenue fell, and payroll tax revenue fell. But the government made an extra $57 billion. That's a lot of money, kind of! Where did it come from? Corporate profits and the Fed, says Bob Williams at the Tax Policy Center.

Year-over-year revenue changes were highly uneven, however. Corporate income taxes jumped about 40 percent to $192 billion--up $54 billion from 2009--largely because profits rose but also because temporary provisions allowing firms to depreciate assets more rapidly expired. (Congress extended accelerated depreciation retroactively in September, but any tax savings won't come until FY2011.) Federal Reserve receipts jumped more than 120 percent ($42 billion) on the Fed's greatly expanded investment portfolio, mostly acquired to boost the economy and prop up the ailing housing market.
We're still down $400 billion from tax revenues in 2007, which is about one-third of our deficit. If you forecast where 2010 tax revenue would have been without a recession, you'd find that depressed taxes made up closer to half of our deficit.


Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we still save the night sky?

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we still save the night sky?

Video

The Faces of #BlackLivesMatter

Scenes from a recent protest in New York City

Video

Desegregated, Yet Unequal

A short documentary about the legacy of Boston busing

Video

Ruth Bader Ginsburg on Life

The Supreme Court justice talks gender equality and marriage.

Video

Social Media: The Video Game

What if the validation of your peers could "level up" your life?

Video

The Pentagon's $1.5 Trillion Mistake

The F-35 fighter jet was supposed to do everything. Instead, it can barely do anything.

More in Business

Just In