Please see our introductory pages on payroll tax receipts for some background information on this data series.  Also our previous update (Feb. 17th) for a discussion of 2012 potential tax receipt growth.

Note: In all that follows, "Tax Receipts" and "Tax Deposits" refer to payments deposited by employers on the basis of payroll activity, and received by the US Treasury . The deposits consist of income tax withheld from employees, plus payroll taxes (i.e. Social Security and Medicare contributions made by both the employer and employees.) We analyze the Daily Treasury Statements and, despite any appearance to the contrary in the Treasury’s Monthly Statements, these two taxes cannot be separately identified at the time deposits are received.

 

Understanding Tax Receipts During This Bonus Season.

In the chart above, we see the year-on-year growth in receipts falling to almost zero in the four-weeks ended March 13th, from a high of 4% at the beginning of the month.

This looks to be due to a shifting forward of some 2012 March bonuses into February. Some employers may have wished to ensure - while the payroll tax holiday extension was still in doubt - that their employees enjoyed the 2% reduction on their bonus tax before it possibly expired in March.

We expect a rebound in growth over the next three to four weeks. As discussed in our previous Update, if - as per the BLS - job numbers are up 1.5% year-over-year, and average wages up 2.5%, we should see growth in tax receipts of between 4% and 5% once we are into April and out of bonus season.