(RepublicanInformer.com)- Changes at the IRS are in full effect, and it’s being seen already at how much the agency has been able to collect in taxes.
A study released by the Tax Foundation recently found that tax collections across the country have increased 23% this year compared to last. Data from the report was taken from the Congressional Budget Office.
This surge in tax collections the IRS is even before the federal agency is set to receive billions in new federal aid in the coming years. The increase in tax collections are due in part to the fact that wages are up in much of the country.
The problem for most Americans is that any increase in earnings they may be enjoying is completely erased by the fact that inflation is still out of control. Compared to last year, the Consumer Price Index has soared 8.3% this year. The cost of food (11.4% increase) as well as energy (23.8% increase) have been particularly challenging for many people.
At this current pace of collections, the IRS will end up collecting a record $5 trillion in what are known as nominal dollars for this fiscal year, which ends on September 30. That would mark a $1 trillion increase over last fiscal year, when the IRS broke the record for the most tax collections in one year.
The biggest factor in this overall increase has been individual income tax collections, which have increased 32% in the last year, from $1.8 trillion to $2.4 trillion.
There was a 14% increase in payroll taxes, going from $1.2 trillion to $1.4 trillion. Corporate taxes have also increased 12%, from $285 billion to $319 billion.
Other revenues experienced a 17% increase from last fiscal year to this fiscal year, from $218 billion all the way to $328 billion.
All of this is directly attributable to inflation, too. As a Forbes report points out, inflation results in not just higher prices but also higher wages. That typically results in higher salaries at businesses and higher profits as well. Those two things typically then result in higher tax receipts for both individuals and businesses.
It’s a cycle that doesn’t end, with the federal government benefitting while individuals and businesses continue to get hurt.
Federal tax collections are close to the all-time high record of accounting for 20.5% of the U.S. GDP, a record that was set during World War II in 1943. The average level of federal tax collections following World War II has been 17.2%. Collections for this year are on pace to exceed the average level by 3%.
Some people might suggest that higher tax collections would put the U.S. in a better overall economic situation. The problem with that thinking, though, is that it does nothing to quell the concerns of individuals and business owners.
Many of these people are worried that all the additional funding the IRS is receiving is going to result in a marked increase in audits, which will cost these individuals and business owners even more money at a time when they’re stretched so thin as it is.
