As I mentioned in my last post, the CBO presented their analysis of current economic conditions and future projections. The CBO is careful to note that ten year projections should be treated cautiously. While the CBO’s short term forecasts can be fairly accurate, their long term forecasts are sometimes far off the mark.
Below is a graph of the CBO’s assumptions in making their forecast for 2020. (Click to enlarge in separate tab)
Individual income taxes as a percent of total Federal revenues has never risen above 50% in the past forty years. The CBO is therefore projecting historically high income taxes during the next decade. But more disturbing in their 2020 projections is that corporate income taxes are relatively low. The chart below shows the historical percentages that individual and corporate income taxes have been as a percentage of total revenue.
Over the past 40 years, individual income taxes have averaged 46% of federal revenues. Corporate income taxes have averaged 12%. Why is the CBO projecting such a shift of the tax burden from corporations to individuals in the next decade?