Americans paid out a record amount of taxes in January, eclipsing the early 2008 peak, as payroll-tax relief expired and tax rates rose on higher earners.
Personal and social insurance taxes totaled just over $2.6 trillion at a seasonally adjusted annual rate, Commerce Department data out Friday showed. Receipts jumped by $113 billion from December's total, which had been inflated by year-end bonuses and dividends awarded before the tax hikes.
January's tax take is more than $500 billion above the mid-2009 level. Rising revenues have helped trim budget deficits, but they remain high because spending has outpaced the economy over the past five years.
Pocketbook Pain Higher taxes have acted as a steady head wind for disposable income. The fiscal-cliff tax hikes, projected to bring in close to $200 billion in the first year, appeared to take a toll in January.
Real personal spending rose an "anemic" 0.1%, noted IHS Global Insight economist Chris Christopher. The payroll tax hike "hurt many Americans where it counts — in their pocket books," he wrote.
After years of falling median household incomes, adjusted for inflation, the payroll tax hit "has hurt many mid- to lower-tier retail chain stores," he noted.
Personal income dived 3.6% in January, with disposable income down 4%.
Total wages remain 2.2% below December 2007 levels in real terms, meaning the wage recessionhttp://news.investors.com/economy/022813-646108-wage-recession-worse-than-jobs-slump.htm is 61 months, the worst slump by far since World War II.
Social insurance taxes, primarily for Social Security, Medicare and unemployment insurance, eclipsed $1 trillion for the first time, jumping $127 billion from December to nearly $1.1 trillion.
That reflected the end of the 2 percentage-point employee payroll tax cut along with Medicare payroll tax hikes that took effect this year under ObamaCare.
Now, instead of the 2.9% combined employee and employer tax on wages, households will face a 3.8% hospital insurance tax on income over $250,000 — including investment income.
Personal current taxes (primarily federal and state income taxes and not sales or most property taxes) were just above $1.5 trillion. That was down slightly from December despite the rise in the top federal rate to 39.6%. The decline reflected the come-down after a boost from the prior month's dividends and bonuses.
The Congressional Budget Office has projected that federal tax receipts, including corporate taxes, will rise from 15.8% of GDP in fiscal 2012 to 16.9% this year. But the run rate for taxes is a bit higher, since the fiscal cliff deal didn't take effect until the second quarter of FY 2013.
In 2014, CBO sees revenue returning to 18% of GDP, close to the historical average.
A tax-refund delay due to the last-minute fiscal cliff deal likely lifted net tax receipts in January, but payments likely would have reached a record in any case.