Congressional Budget Office Predicts $1.8 Trillion Deficit Due in Part to Changes in Tax Policy

The federal budget deficit for the current year will top $1.8-trillion according to the latest estimates produced by congressional economists

The Congressional Budget Office cited recent government bailouts, tax legislation and the continuing turmoil in financial markets as causes for the growth in the deficit . The latest figures, fueled by the $700 billion Wall Street bailout and diving tax revenues stemming from the worsening recession, would shatter the previous record for a federal shortfall of $459 billion, set just last year.

The 10-year outlook was no better, as the CBO projected a $9.3-trillion deficit over 2010-2019, which is $2.3 trillion more than the administration had initially forecast and exceeds gross domestic product by over 5 percent.

Proposed changes in tax policy are responsible for a 6.1 percent or $2.1 trillion loss in federal revenues over the next 10 years. The proposals with the greatest effect on the budget include modifications to and the permanent extension of provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 nd the Jobs and Growth Tax Relief Reconciliation Act of 2003 extension of the Making Work Pay tax credit, indexing of the exemption amounts for the AMT, implementation of a cap-and-trade program to reduce greenhouse-gas emissions and limits on itemized deductions.

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5 Responses to “Congressional Budget Office Predicts $1.8 Trillion Deficit Due in Part to Changes in Tax Policy”

  1. Small Business Beware - Expect Greater IRS Enforcement as the Agency Cracks Down on Income and Payroll Tax Problems | Tax Relief Tips from the Experts at Tax Resolution University Says:

    [...] recently blogged about the federal budget forecast for a $1.8 trillion deficit. There is close to a $400 billion tax gap each year.

  2. California Taxpayers with the Largest Delinquent Income Tax Bills Owe $143 Million in Back Taxes | Tax Relief Tips from the Experts at Tax Resolution University Says:

    [...] 21% of federal individual income taxes go unpaid each year — contributing to a $400 billion tax gap [...]

  3. 5 Reasons to File Delinquent Tax Returns: There’s Still Hope if You Haven’t Paid Your Taxes This Year | Tax Relief Tips from the Experts at Tax Resolution University Says:

    [...] the federal budget deficit for the current year expected to top $1.8 trillion, Americans can expect more tax audits and [...]

  4. IRS to Hire 800 New Agents as Obama Declares War on Multi-National Corporations and Offshore Tax Shelters | Tax Relief Tips from the Experts at Tax Resolution University Says:

    [...] The president said that his plan would generate $210 billion in new taxes over 10 years and “make it easier” for companies to create jobs at home. Over a decade, $210 billion would make a modest dent in the forcasted $1.8 trillion federal deficit. [...]

  5. iDEA Desk Says:

    Nearly $0.50 of every dollar the US government spends… must now be borrowed. Office of Management and Budget projects that the deficit will be about $90 billion higher in FY 2009 and also in 2010 than it did in February. The deficits in these years, now projected to be 12.9 percent and 8.5 percent of GDP, respectively, are driven in large part by the economic crisis and spending by this Administration. Here are the details on the OMB website http://pfx.me/Bl

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