The Tax Haul Of '93 Points To Hidden Economic StrengthGene Koretz
The consensus among economists is that real growth in the second quarter, to be released in late July, will come in at less than 2%. But economist Joseph G. Carson of Dean Witter Reynolds Inc. thinks it could be 2.6% or more.
Carson bases his prediction on federal tax receipts. In June, corporate income-tax payments were 16.8% higher than a year ago. Part of that is due to a law change that makes companies pay more in the quarter they earn the income. But Carson figures corporate payments are up at least 12% from last year. And federal withheld individual income and payroll tax receipts (excluding estimated tax payments) are up 5% to 6% over 1992, even though the government estimates that wage and salary income is running only 4.5% ahead of last year.
"Companies and individuals don't pay taxes on phantom income," argues Carson. "Tax revenues are pointing to a stronger economy than the consensus expects and one that clearly gained strength at the end of the quarter."