Yearly Report PART II Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Revenues

Published on Mon, April 13, 2020 3:32PM PDT | Updated Fri, April 17, 2020 6:26PM PDT

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Revenues > Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations > PART II > Government 10-K

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Revenues36

Fiscal year 2017 compared with fiscal year 2016

 

 

2017

 

 

2016

 

 

Changes 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In billions, except percentages)

 

Total

 

Federal

 

State and

Local 1

 

 

Total

 

Federal

 

State and

Local 1

 

 

Total

 

Federal

 

State and

Local 1

 

Total

 

Federal

 

State and

Local 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individual income taxes

 

$

1,971

 

$

1,587

 

$

384

 

 

$

1,922

 

$

1,546

 

$

376

 

 

$

49

 

$

41

 

$

8

 

 

3%

 

 

3%

 

 

2%

Payroll taxes

 

 

1,180

 

 

1,180

 

 

 

 

 

1,133

 

 

1,133

 

 

 

 

 

47

 

 

47

 

 

 

 

4%

 

 

4%

 

 

—%

Sales and excise taxes

 

 

658

 

 

84

 

 

574

 

 

 

654

 

 

95

 

 

559

 

 

 

4

 

 

(11)

 

 

15

 

 

1%

 

 

(12)%

 

 

3%

Property taxes

 

 

526

 

 

 

 

526

 

 

 

503

 

 

 

 

503

 

 

 

23

 

 

 

 

23

 

 

5%

 

 

—%

 

 

5%

Corporate income taxes

 

 

350

 

 

297

 

 

53

 

 

 

354

 

 

300

 

 

54

 

 

 

(4)

 

 

(3)

 

 

(1)

 

 

(1)%

 

 

(1)%

 

 

(2)%

Other taxes

 

 

189

 

 

67

 

 

122

 

 

 

182

 

 

66

 

 

116

 

 

 

7

 

 

1

 

 

6

 

 

4%

 

 

2%

 

 

5%

Tax revenues

 

$

4,874

 

$

3,215

 

$

1,659

 

 

$

4,748

 

$

3,140

 

$

1,608

 

 

$

126

 

$

75

 

$

51

 

 

3%

 

 

2%

 

 

3%

Earnings on investments

 

$

458

 

$

 

$

458

 

 

$

54

 

$

 

$

54

 

 

$

404

 

$

 

$

404

 

 

748%

 

 

—%

 

 

748%

Federal Reserve earnings

 

 

82

 

 

82

 

 

 

 

 

116

 

 

116

 

 

 

 

 

(34)

 

 

(34)

 

 

 

 

(29)%

 

 

(29)%

 

 

—%

Sales of government resources

 

 

19

 

 

5

 

 

14

 

 

 

25

 

 

11

 

 

14

 

 

 

(6)

 

 

(6)

 

 

 

 

(24)%

 

 

(55)%

 

 

—%

Other non-tax revenues

 

 

164

 

 

37

 

 

127

 

 

 

154

 

 

30

 

 

124

 

 

 

10

 

 

7

 

 

3

 

 

6%

 

 

23%

 

 

2%

Total non-tax revenues

 

$

723

 

$

124

 

$

599

 

 

$

349

 

$

157

 

$

192

 

 

$

374

 

$

(33)

 

$

407

 

 

107%

 

 

(21)%

 

 

212%

Total revenues

 

$

5,597

 

$

3,339

 

$

2,258

 

 

$

5,097

 

$

3,297

 

$

1,800

 

 

$

500

 

$

42

 

$

458

 

 

10%

 

 

1%

 

 

25%

Estimated impact of inflation on total revenues

 

 

 

 

 

 

 

 

 

 

 

 

$

105

 

$

68

 

$

37

 

 

2%

 

 

2%

 

 

2%

Estimated Impact of population growth on total revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

32

 

 

21

 

 

11

 

 

1%

 

 

1%

 

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 State and local revenue excludes transfers from the federal government. See separate schedule and discussion of intergovernmental transfers at Note 23 - Intergovernmental transfers (Part II, Item 8 within this annual report).

2 Key changes are highlighted in gray in the table above and are discussed in the sections below.

2016 to 2017 | Federal individual income tax revenue

The federal individual income tax revenue increase of $41 billion can be attributed $90 billion* to higher taxable income, offset in part by a decrease of $49 billion* attributed to changes in in average tax rates.

Income changes*

The $90 billion increase in revenue attributable to higher taxable income reflected a $592 billion or 6% increase in aggregate AGI, offset in part by an $88 billion or 3% increase in aggregate deductions and exemptions. Following are the income components of AGI shown by AGI group (cohort).

 

2017

 

2016

 

 

Changes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In billions, except percentages)

Wages and Salaries

 

Capital Gains

 

Partnership

and S-Corp

 

All Other 1

 

Total AGI

 

 

 

Wages and Salaries

 

Capital Gains

 

Partnership

and S-Corp

 

All Other 1

 

Total AGI

 

 

 

Wages and Salaries

 

Capital Gains

 

Partnership

and S-Corp

 

All Other 1

 

Total AGI

 

Wages and Salaries

 

Capital Gains

Partnership

and S-Corp

All Other 1

Total AGI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                             

 

 

 

Less than $1

$

20

 

$

17

 

$

(55)

 

$

(206)

 

$

(224)

 

 

 

$

20

 

$

13

 

$

(44)

 

$

(191)

 

$

(202)

 

 

 

$

 

$

4

 

$

(11)

 

$

(15)

 

$

(22)

 

 

—%

 

31%

(25)%

 

(8)%

(11)%

$1-$50K

 

1,594

 

 

10

 

 

8

 

 

353

 

 

1,965

 

 

 

 

1,590

 

 

8

 

 

7

 

 

357

 

 

1,962

 

 

 

 

4

 

 

2

 

 

1

 

 

(4)

 

 

3

 

 

—%

 

25%

 

14%

 

(1)%

—%

$50,001-$75K

 

991

 

 

11

 

 

10

 

 

264

 

 

1,276

 

 

 

 

960

 

 

9

 

 

10

 

 

259

 

 

1,238

 

 

 

 

31

 

 

2

 

 

 

 

5

 

 

38

 

 

3%

 

22%

 

—%

 

2%

3%

$75,001-$100K

 

866

 

 

15

 

 

14

 

 

264

 

 

1,159

 

 

 

 

848

 

 

11

 

 

13

 

 

250

 

 

1,122

 

 

 

 

18

 

 

4

 

 

1

 

 

14

 

 

37

 

2%

 

36%

 

8%

 

6%

3%

$100,001-$200K

 

1,992

 

 

59

 

 

61

 

 

557

 

 

2,669

 

 

 

 

1,911

 

 

49

 

 

60

 

 

521

 

 

2,541

 

 

 

 

81

 

 

10

 

 

1

 

 

36

 

 

128

 

 

4%

 

20%

 

2%

 

7%

5%

$200,001-$500K

 

1,182

 

 

99

 

 

137

 

 

307

 

 

1,725

 

 

 

 

1,094

 

 

76

 

 

132

 

 

276

 

 

1,578

 

 

 

 

88

 

 

23

 

 

5

 

 

31

 

 

147

 

 

8%

 

30%

 

4%

 

11%

9%

$500,001-$1 million

 

371

 

 

73

 

 

124

 

 

92

 

 

660

 

 

 

 

342

 

 

56

 

 

118

 

 

83

 

 

599

 

 

 

 

29

 

 

17

 

 

6

 

 

9

 

 

61

 

 

8%

 

30%

 

5%

 

11%

10%

Over $1 million

 

472

 

 

502

 

 

368

 

 

242

 

 

1,584

 

 

 

 

426

 

 

412

 

 

333

 

 

213

 

 

1,384

 

 

 

 

46

 

 

90

 

 

35

 

 

29

 

 

200

 

 

11%

 

22%

 

11%

 

14%

14%

Total

$

7,488

 

$

786

 

$

667

 

$

1,873

 

$

10,814

 

 

 

$

7,191

 

$

634

 

$

629

 

$

1,768

 

$

10,222

 

 

 

$

297

 

$

152

 

$

38

 

$

105

 

$

592

 

 

4%

 

24%

 

6%

 

6%

6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 All Other includes interest, dividends, state income tax refunds, business or profession net income (loss), taxable individual retirement arrangements distributions, taxable pensions and annuities, taxable social security benefits, and other income(loss), less: self-employed SEP, self-employed health insurance, retirement account deductions, student loan interest deductions, tuition and fees deduction, domestic production activities deduction, and other deductions.

AGI by cohort

AGI increased for nearly all income cohorts, most significantly for the cohorts with AGI above $100,000, a group which saw its aggregate AGI increase over $536 billion or 9% for the year. The cohort with the largest dollar and rate increases in AGI is the one with AGI greater than $1 million, at an increase of $200 billion or 14%, driven primarily by higher net capital gains but with increases across all sources of income. The increases in AGI for these cohorts were offset in part by a $22 billion or 11% decrease in AGI for the cohort where AGI is less than $1.

AGI by income type

Roughly half of the overall $592 billion increase in AGI was driven by higher wages and salaries, which increased $297 billion or 4%. All cohorts with AGI of $1 or more saw wage and salary growth. The largest dollar amount of growth, at an increase of $88 billion or 8%, was for the cohort with AGI between $200,001 and $500,000. The highest rate of wage and salary growth, at 11% or $46 billion, was for the cohort with AGI over $1 million.

Net capital gains income increased $152 billion or 24%, comprising 26% of the overall increase in AGI. All AGI cohorts saw increases in net capital gains income. The largest dollar amount of growth, at an aggregate increase of $90 billion or 22%, was for the cohort with AGI over $1 million. The highest rate of growth, at 36% or $4 billion, was for the cohort with AGI between $75,001 and $100,000. The average daily closing price of the S&P 500 between these federal fiscal years (October 1 to September 30) increased 14%, which may have contributed to increases in capital gains.

Partnership and S-Corporation income increased $38 billion or 6%, comprising 6% of the overall increase in AGI. Most of the increase was for the cohort with AGI over $1 million, where Partnership and S-Corporation income increased $35 billion or 11%. The highest rate of growth, at 14% or $1 billion, was for the cohort with AGI between $1 and $50,000.

Income within the “All Other” category shown in the table above increased $105 billion or 6%, comprising 18% of the overall increase in AGI. This increase was driven primarily by a $70 billion or 6% increase in taxable retirement income, comprising taxable Individual Retirement Account (IRA), pension and annuity, and Social Security distributions, with pension and annuity income comprising 39% of the total change. The largest dollar amount of taxable retirement income growth, at an increase of $33 billion or 9% was for the cohort with AGI between $100,001 and $200,000. The highest rate of taxable retirement income growth, at 18% or $4 billion, was for the cohort with AGI between $500,001 and $1,000,000. During this period, the population of those aged 65 years and older, the cohort most likely to be taking retirement income distributions, increased 3%.

AGI mobility

((In thousands, except percentages)

 

2017

 

 

 

 

 

2016

 

 

 

 

Changes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than $1

 

2,045

 

 

 

 

 

2,086

 

 

 

 

 

(41)

 

 

(2)%

$1-$50K

 

88,857

 

 

 

 

 

89,501

 

 

 

 

 

(644)

 

 

(1)%

$50,001-$75K

 

20,775

 

 

 

 

 

20,163

 

 

 

 

 

612

 

 

3%

$75,001-$100K

 

13,375

 

 

 

 

 

12,937

 

 

 

 

 

438

 

 

3%

$100,001-$200K

 

19,678

 

 

 

 

 

18,777

 

 

 

 

 

901

 

 

5%

$200,001-$500K

 

6,057

 

 

 

 

 

5,544

 

 

 

 

 

513

 

 

9%

$500,001-$1 million

 

981

 

 

 

 

 

891

 

 

 

 

 

90

 

 

10%

Over $1 million

 

477

 

 

 

 

 

428

 

 

 

 

 

49

 

 

11%

Total

 

152,245

 

 

 

 

 

150,327

 

 

 

 

 

1,918

 

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The number of income tax returns filed for the lowest income cohorts, those with AGI of $50,000 or less, decreased by 685 thousand tax returns in aggregate, while the number of tax returns filed increased for all other AGI cohorts. The group with the highest increase in number of returns filed was the cohort with AGI between $100,001 and $200,000, at an increase of over 900 thousand returns, while the group with the highest percentage increase in the number of returns filed was the cohort with AGI over $1 million, at an increase of 11%.

Deductions and exemptions

 

2017

 

 

 

2016

 

 

 

Changes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In billions, except percentages)

Itemized Deductions

 

Standard Deductions

 

Exemptions

 

Limitations 1

 

Total Deductions / Exemptions

 

 

 

Itemized Deductions

 

Standard Deductions

 

Exemptions

 

Limitations 1

 

Total Deductions / Exemptions

 

 

 

Itemized Deductions

 

Standard Deductions

 

Exemptions

 

Limitations 1

 

Total Deductions / Exemptions

 

Itemized Deductions

 

Standard Deductions

Exemptions

Limitations 1

Total Deductions / Exemptions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than $1

$

 

$

 

$

12

 

$

(236)

 

$

(224)

 

 

 

$

 

$

 

$

13

 

$

(215)

 

$

(202)

 

 

 

$

 

 

 

 

(1)

 

 

(21)

 

$

(22)

 

 

nm

 

nm

 

(8)%

 

10%

11%

$1-$50K

 

159

 

 

634

 

 

572

 

 

(209)

 

 

1,156

 

 

 

 

158

 

 

637

 

 

582

 

 

(213)

 

 

1,164

 

 

 

 

1

 

 

(3)

 

 

(10)

 

 

4

 

 

(8)

 

 

1%

 

%

(2)%

 

(2)%

(1)%

$50,001-$75K

 

142

 

 

131

 

 

174

 

 

(2)

 

 

445

 

 

 

 

138

 

 

127

 

 

171

 

 

(3)

 

 

433

 

 

 

 

4

 

 

4

 

 

3

 

 

1

 

 

12

 

 

3%

 

3%

 

2%

(33)%

3%

$75,001-$100K

 

149

 

 

73

 

 

127

 

 

(3)

 

 

346

 

 

 

 

142

 

 

70

 

 

124

 

 

(1)

 

 

335

 

 

 

 

7

 

 

3

 

 

3

 

 

(2)

 

 

11

 

 

5%

 

4%

2%

 

200%

3%

$100,001-$200K

 

391

 

 

59

 

 

210

 

 

(2)

 

 

658

 

 

 

 

368

 

 

56

 

 

202

 

 

(2)

 

 

624

 

 

 

 

23

 

 

3

 

 

8

 

 

 

 

34

 

 

6%

 

5%

 

4%

 

%

5%

$200,001-$500K

 

249

 

 

5

 

 

58

 

 

(2)

 

 

310

 

 

 

 

226

 

 

4

 

 

53

 

 

(1)

 

 

282