Tax revenues continue to plummet: Is it time to panic?

Two months ago, the predictions were dire. The Treasury Department calculated that at the then-current pace, tax receipts for 2009 would be almost 20% less than last year. The drop in tax revenues was thought to be the steepest decline since 1932 during the Great Depression.

Data out this week, however, is even worse. Collections through the end of August are down 25%. Those numbers include collection rates for individual taxes, corporate taxes, Social Security and Medicare revenues and other payroll taxes. Corporate income tax revenues alone plunged nearly 60%.