Corporate Tax Revenues Still Look WeakBy Catherine Rampell
Update | 5:30 p.m. Updated to include local tax data.
Along with its revised estimates for gross domestic product, the Bureau of Economic Analysis today released corporate profits for the first quarter. A number of analysts seized onto the corporate profits data as a potential “green shoot.”
Corporate profits rose 3.4 percent from the last quarter of 2008 to the first quarter of this year. This might sound like good news for cash-strapped states that depend on corporate income taxes. But if you look at year-over-year numbers for corporate profits and corporate income tax revenues, things still look awful.
Compared with the first quarter of last year, corporate profits are down 18 percent (and in just the financial sector, they fell 41.5 percent). Corresponding corporate income tax revenues, at federal, state and local levels, are equally dismal. Here’s a chart showing the year-over-year percent changes in corporate income tax revenues going back to 1999:
Federal corporate income tax revenues fell 28.3 percent in the first quarter of this year compared with the same period a year ago. State and local corporate income tax revenues fell 29.3 percent.
Corporate income tax levels have fallen further on a year-over-year basis during this recession (specifically, in the fourth quarter of 2008) than in any previous quarter going back at least a half century. Note that these numbers, like the ones in the chart above, are in current dollars (i.e., not adjusted for inflation):Source: Bureau of Economic Analysis"