Tuesday, December 8, 2009

Collapse In Tax Withholdings Refutes Improvements In Either Unemployment Or Corporate Profitability

Tyler Durden is all over this one:
On a rolling 12 month basis, individual tax withheld has dropped by nearly 8% YoY, from $1.42 trillion to $1.31 trillion, while company witholding are down a whalloping 64%, from $274 billion to just under $100 billion! This is money that will never be used to pay down the skyrocketing US deficit, because both the US consumer and average US company are simply not collecting the required cash to line the Treasury's pockets with the one traditional way to pad the deficit: taxes. Expect much, much, much more debt issuance in America's short, medium and long-term future.
And from a Durden reader:
A perspective on the level of US unemployment is not whether someone is employed or partly employed (and varying obtuse definitions) but the level of wages being generated by the consumers. Only wages pay the bills (and generate economic activity), not employment definitions. An insight into National wages is the daily (cash) tax collections published by the Financial Management Service. The rolling 12 months figures show a consistent decline, with Nov 2009 showing a 7.6% decline from Nov 2008. Drilling down into actual monthly figures does not indicate any trend change. The rolling 12 Month Company tax payments shows a 63.95% decline to Nov 2009. Monthly net collections again show no change in trend, with the month to 4th December showing a further refund of $14 Billion.
Did I mention you have to be insane to hold dollar denominated long term bonds? Oh yeah, I did.

No comments:

Post a Comment