How Much has Federal Tax Revenue Fallen?

How much the federal tax revenue falls or increases is directly related to the economy as a whole. For the 2008 reporting year the IRS reported a $ 138 billion dollar loss from the previous year. This is the equivalent to a 34% loss. 

Economy and Tax Revenue

Federal income tax revenue is greatly affected by the unemployment rate. If an economy is in a slump and there are a lot of layoffs, there will be less income to report. Less income means less taxes that the taxpayer is responsible for, meaning less IRS tax revenue. It is a cycle that can only be broken with an improved economy.

What Does It Mean?

When the Federal income tax revenue falls the main item affected is the federal budget. When a budget number is affected with such a large loss of income, items on the budget must be cut. Usually it will affect the federal deficit number.  With less revenue the government is not able to take large strides to pay down the deficit. As the economy improves with time so will tax revenue. Once the tax revenue increases then the budget to pay down the deficit will get back on track.