April Was Cruel… To the US Tre
Our monthly review of tax data from the US Treasury’s Daily Statement shows three important points. First, overall employment and wage trends in the US are still on a solid footing. Individual tax/withholding payments from salaried/hourly workers rose 4.5% year over year in April and are up 3.7% on a three month rolling average basis. Second, April tax season was a bit of a bust for Treasury, with receipts down 5.7% from last year and at the lowest levels in 5 years. We attribute that to the delayed realization of capital gains in 2016, with asset owners deferring sales ahead of anticipated tax changes this year. That also explains a bit of the slow US equity trading volume and low volatility of 2017 – those asset owners still don’t know what the new tax code may bring and may be continuing to defer sales. Lastly, ‘Gig economy’ tax receipts (not withheld, but paid directly by the worker) show this post-Financial Crisis labor market phenomenon is on the wane, down 5.5% in Q1 2017 after a 4.8% decline in Q4 2016.
April is to the US Treasury what Christmas is to retailers: the busiest and most profitable time of the year. In 2016, for example, the Treasury’s Internal Revenue Service took in $193 billion in payments from individuals as a result of the usual April deadline for filing personal taxes. By comparison the IRS took in only $15 billion in the month before and $12 billion the month after from taxpayers sending their remittances to the US government.
This post was published at Zero Hedge on May 7, 2017.
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