Tax Revenue: Largest Drop in Nearly 30 Years

" While the numbers are in for this -- tax season and the Treasury Department. Coming up very short this year a study done by the American institute for economic research found the Treasury's April revenue dropped. From 404 billion dollars last year to 266. Billion dollars this year at the largest drop. You know over nearly thirty years Richard -- is a senior fellow of the American institute of economic research and Ron -- tax attorney and CEO Ron Deutch tax center good morning guys good to see -- you for being here Richard let me start with you. Why huge falloff in tax revenue is why did it happy and are you surprised by some of the numbers."

" Well it's basically due to the fact that we had such a severe downturn in the economy as a whole. Individuals of lost jobs and business revenues are down. And when there's less income being earned and less revenues in the business sector obviously those taxes are paid to the federal government. And it's not just April as you pointed out which was a 35% decline compared to with the government took in in April 2008. It's way down in general. For example in fiscal year 2008. And 2007. The federal government took in approximately 633. Billion dollars every. Quarter during its fiscal years. For the first quarter of 2000 denying. It took him practically only 442. Billion dollars or 30%. Decrease on the average amount on a quarterly basis. Of the significance of this of course is that with the government doesn't take in in revenue. Has to be made up through either borrowing or money being created by the Federal Reserve to cover the government's growing expenditures."

" It it it's hard to digest I if he'd given especially all the programs Ronnie that we are talking about a one of the biggest. Issues have to be the loss of jobs but she did a loss of financial jobs what is that due to the IRS. -- first of all Lexus wonderful to speak."

" With you when you and I stepped back and look at the severity of this issue. Not only are we losing jobs but as Richard pointed out the government's going to have to raise money somewhere so you what I know -- we've been talking about this. For a long time. We are going to see a significant increase in taxes. At a time when we are downsizing and losing incredible job so when you and I step back and say how we're just going to effect us the taxpayer. We again are gonna bear this burden it's not just bailing out now president Obama's going to stand up and say. Hey look at the numbers these numbers are pathetic which means I'm going to be able to raise taxes across the board what about the states as you pointed out earlier. California's got what a 22 billion dollar deficit. All the other states -- a hundred billion. They're already raising taxes and not just personally -- back is Alexis we're talking what gasoline taxes sales taxes so really we're going to lose jobs. We're going to lose revenue and it's going to be awful for you and by the taxpayer. You know I mean Richard --"

" I mean -- section of an important point here we were talking earlier about how these states in this union are right now facing. A basically a statewide budget gap between the less statistics back in February said that seven. States at that time were in the green I don't know since February a lot has happened. So I would assume that it's getting progressively worse. What does is still all these government spending programs what is this due to the waiting on our -- because part of the issue massive shortfall here it's cool. Tax it."

" Well the fact is is as was shown an average just recently when Obama suggested these token cuts. Every congressman senators senator said yes cuts are important but not in my jurisdiction my district my constituents. So the fact no cuts are going to occur. Taxes will be raised but I think the additional danger is the fact that he's going to be this huge deficit. The deficit this year is equal to two thirds of all that the government spent in the last fiscal year under bush. The result is is that the government is going to have to offer rising interest rates to attract. Private or foreign of borrowers -- two to lend the money. Or we'll have to go to the Federal Reserve and has Ben Bernanke. To start turning the hand of the printing press. To create the money to cover this government spending so besides taxes. We're facing possibly rising interest rates and even significant price inflation looking down the road that doesn't help the investment -- employment picture either."

" We want you know how they can do this how they can collect the funds that they're losing talk to me about the specific type tax is that are most likely. That we will see why is as a result of the shortfalls."

" You and I know that we are going to see individual income tax right we're going to see corporate tax right we're going to see interest and dividend tax right we're going to see every tax across the board rise. But I want to get back to your great point Alexis. Collection activity remember I'm in the trenches every day cares what I'm saying increase in bank levees. Increasing tax rulings increase in wage garnish with do you realize that UBS. Open the door to so many tax loopholes that we're going to slam so we're going to see increased. Collection activity audit who want to talk about -- so early in the morning. But we know a Lexus we're going to go after increased collection activity which is not only international. It's here in the United States and raise taxes 100%. Across the board. He is not going to be able to keep his promise to keep taxes down so are making less than 200000."

" So if you question because it I think the question viewers at home are asking is. How many people this year realistically. He filed on time and air for. In the April number or at least the numbers that we have right now representative. Of the real tax revenue that the governor is gonna get or didn't you know most people both all of -- mean we both."

" Yes numbers don't lie do you realize that over ten million people failed to file on April 15. But we also have to talk about the people that are missing. Those tax gap people -- to remember them they're not even in the system. And they're not paying taxes so I have bad news the -- is a business. And their numbers are drastically down and that ten million people that -- between now and October 15. Let's hope they fire all I don't think we're going to see that much of a significant increase in revenue that's going to do anything to help us we got to decrease spending. The wealthy cannot bear the burden on the federal level and on the state level when it's absolutely unfair we can't just got -- fifteen seconds to go here."

" When will we actually see the numbers of life."

" I'm not optimistic other than the false rising up. Of rising inflation that artificially pushes people's incomes up because the Federal Reserve is printing a lot of money."

" All right unbelievable statistics Richard -- to wit that having the two of you here it was a real gut check but it's -- way things are going thanks guys. Thank you -- sorry we'll check."