The current estimates of receipts for 2001 and
2002 are below the April Budget estimates by $124.2 billion and
$57.0 billion, respectively. The current estimates are below the
April Budget estimates for 2003 and 2004, but exceed the April
Budget estimates in 2005 and subsequent years, resulting in a net
upward revision in receipts of $73.7 billion over the 10-year
period 2002 to 2011. These changes are the net effect of enactment
of the Economic Growth and Tax Relief Reconciliation Act of 2001
(Tax Relief Act), modification of the Administration's proposals to
reflect the Administration's National Energy Policy tax incentives
and enactment of the Tax Relief Act, revised economic projections,
and technical reestimates.
The Tax Relief Act, which was signed by
President Bush on June 7, 2001, provides over $1.3 trillion in tax
relief over the 11-year period 2001 to 2011. Because this Act (1)
provides individual income tax relief beginning this year, with the
first installment provided through payments of advanced credits and
reduced withholding, which began in July, (2) increases the child
tax credit to $600 beginning January 1, 2001, and (3) delays the
payment of estimated taxes by corporations, otherwise due on
September 17, 2001, until October 1, 2001, receipts are reduced
relative to the April Budget proposals by $67.9 billion in 2001.
However, because the tax relief provided in this Act is less than
the relief proposed by President Bush in the budget, receipts are
increased relative to the April Budget proposals by $505.0 billion
over the 10 years, 2002 through 2011.
The Administration's policy initiatives are
estimated to reduce receipts by $0.6 billion in 2002 and $314.2
billion over the 10-year period 2002 through 2011. These
initiatives include the Administration's National Energy Policy tax
incentives, many of the Administration's April Budget proposals
that were not enacted in the Tax Relief Act, and permanent
extension of the provisions provided in the Tax Relief Act that are
scheduled to expire in 2010.
Revised economic projections reduce receipts by
$21.2 billion in 2001 and $27.3 billion in 2002. For the 10-year
period 2002 to 2011, revised economic assumptions account for
$147.9 billion of the downward revision in receipts. Collections of
individual income taxes and Social Security and Medicare payroll
taxes are reduced by $4.6 billion in 2001, $13.6 billion in 2002
and $71.2 billion over the 10-year period 2002 through 2011, in
large part due to lower levels of wages and salaries in most years.
Lower corporate profits in most years reduce collections of
corporation income taxes by $14.1 billion in 2001, $7.3 billion in
2002, and $25.7 billion over the 10 years, 2002 to 2011. Lower
levels of nominal and real GDP, which affect excise taxes, and
lower interest rates, which affect deposits of earnings by the
Federal Reserve, also contribute to the reduction in receipts in
each year. Customs duties are lower in most years, reflecting lower
levels of imports than forecast for the April Budget.
Technical adjustments reduce receipts by $35.1
billion in 2001, $26.2 billion in 2002, and declining amounts
through 2004. Technical adjustments increase receipts in each
subsequent year, resulting in a net increase in receipts of $30.8
billion for the 10-year period 2002 to 2011. These technical
adjustments are in large part attributable to revisions in
estimating models and actual collection experience.
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