A new paper from the Heritage Foundation shows that federal tax revenues are growing at a much faster rate than what the Congressional Budget Office projected before and after the 2017 tax cuts were enacted, providing more evidence that the tax cuts are not responsible for the higher budget deficits. The numbers show that higher levels of spending, not lower tax revenues, are the cause of the fiscal imbalance.

The paper, first published by the Committee to Unleash Prosperity, compares CBO revenue forecasts for 2018-2027 without the tax cuts and in 2018 after they passed with the current CBO forecast made this year. In 2017, the CBO forecasted that federal revenue over the next 10 years would total $40.7 trillion without any tax cuts. The following year, after the tax cuts, the CBO projected that federal revenue would total $39.6 trillion over the same period, a drop of $1.1 trillion.  

The updated CBO forecast, with six years of actual revenue numbers, shows that revenue over the same 10-year period will total $41.3 trillion, $1.7 trillion higher than the CBO projected after the tax cuts were passed. What’s more, the new forecast shows that revenue is now $600 billion higher than what the CBO projected without a tax cut.

These numbers do not show that the tax cuts paid for themselves. But they do show that the tax cuts are not adding billions of dollars a year to the deficit, as the Biden administration and most of the media claim. Instead, the numbers show that the revenues are much higher than what the CBO projected they would be with the tax cuts. 

The numbers show that revenues are much higher now than they were in 2017 and that spending is even higher. According to the CBO, total federal revenue will reach $4.9 trillion this fiscal year, $1.6 trillion higher than 2017, a 50% increase. By comparison, total federal spending will reach $6.4 trillion this year, $2.6 trillion higher than in 2017, a 74% increase. That’s what caused the deficit. 

Corporate tax receipts are also running at levels higher than what the CBO projected in 2018. After dropping in the first few years after enactment, partly due to the pandemic recession, corporate tax receipts have soared in recent years. The CBO projects corporate revenue will increase to $569 billion this year, the highest level ever, and more than double corporate revenue in 2020. For the first eight months of fiscal 2024, corporate receipts were 33% higher than the same period last year.

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Finally, further proof that the corporate rate cut is not adding to the deficit is that most of the rate cut was paid for in the 2017 bill. According to Joint Committee on Taxation revenue estimates, more than 75% of the revenue impact of the corporate rate cut was paid for by other corporate tax increases.

These numbers all show that we have a spending problem, not a revenue problem. Raising taxes now would just give Washington more money to spend and do nothing to address the deficits. 

Bruce Thompson was a U.S. Senate aide, an assistant secretary of Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.