Cover IMF Working Papers
U.S. Revenue Surprises: Are Happy Days Here to Stay?
Author: Mr. Koshy Mathai, Mr. Andrew J Swiston, and Mr. Martin Mühleisen
Series:
IMF Working Papers
Volume/Issue:
Volume 2007: Issue 143
Language:
English
Publication Date:
01 Jun 2007
DOI:
https://doi.org/10.5089/9781451867077.001
ISBN:
9781451867077
ISSN:
1018-5941
Pages:
29
Keywords:
WP; tax revenue
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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A key question for U.S. policymakers is whether the recent strength in federal revenue is likely to continue. This question is addressed through an econometric analysis of the determinants of tax revenue, using time series that are adjusted for tax policy changes. The results suggest that growth in corporate profits and capital gains each contributed forty percent of the increase in the revenue-to-GDP ratio from 2004-2006, and rising income inequality explains much of the rest. While part of the revenue rise is the result of structural changes taking place in the U.S. economy, some of the recent buoyancy is likely to prove temporary, reflecting the highly cyclical nature of these variables.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund