Tax revenue is coming in lower than expected, and the slowdown might be attributable to individuals and companies shifting their income into the future to take advantage of tax reform, the Congressional Budget Office reported Wednesday.
Total revenue hit $2.2 trillion in the first eight months of fiscal 2017, $60 billion to $70 billion less than estimated, the budget office said in a report on the deficit.
The difference, the CBO suggested, was the result of weaker economic growth than expected or because "taxpayers may have shifted more income than projected from 2016 to later years, expecting legislation to reduce tax rates to be enacted this year." In other words, people are shifting money around to declare earnings in future years, when the tax rate may be lower.
President Trump and congressional Republicans are working toward a tax reform package that would lower tax rates later this year. Members of Congress have said that, if possible, they will make the law retroactive to the start of this year, meaning that 2017 taxes would be lower.
The administration has said that weaker incoming revenue means that Congress will have to raise the federal debt ceiling earlier than previously thought. Treasury Secretary Steven Mnuchin has asked Congress to lift the limit before leaving for their August break.
The federal deficit was $432 billion for the first eight months of fiscal 2017, the CBO said in Wednesday's report, up $26 billion from the same timeframe last year.
If it weren't for major payments falling on a weekend and being shifted into fiscal 2016, the deficit would have been $68 billion larger, according to the office.