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Tax Features Volume 24 Number 3 March 1980

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Tax Features Volume 24 Number 3 March 1980 MONTHLY TAX FEATURES Towar d bette r Volume 24, Number 3, March 1980 government Founded 1937 1875 Connecticut Ave ., N .W. q Washington, D.C. 20009 q 202-328-4500 q Per Capita State and Local Taxe s 42) N .r, $ 66 9 WASH (16) MONT. (32) N .O. INN . (9) i?3i S83 7 (24) $929 $817 $721 $1,001 $970 (39) S .D 289 $1,308 $70'-' will (5 ) (12) $683 13) N y . (2) r• , $1,09 3 IOWA (27) wis. j a22) MICH. (22i IDAHO(36 ) $1,15 6 ILL . $86 2 884 3 NEB . (25) $794 INO. OH IQ (36 ) NN 15) 8941 CALIF . (4) ' NEV. (8) UTA H (17 ) (34) PA (21 ) $81 4 $701 N.1 1101 $993 (31 ) . MO. W .V A COLO (19) $917 $707 i (141 $94 3 $1,004 (45 ) (40) KAS . (26) 111) $98 5 $728 $88 2 $66 2 $67 5 $757 $798 01. 131 81 .245 $653 (43) KY. (30) VA . $1,227 ARIZ . (18) N . EX . (28) OKLA . TENN . (46) N .C . (44) ARK . (48) $61 3 .C . (47) $64 3 $66 0 (51 ) MISS . ALA . GA . $907 $763 $55 3 (49 ) (50) (41 ) $61 5 (34) TEXAS $589 $566 1 $672 LA . Number i n (33) parenthesi s i indicates standin g $707 $716 of state s $1,87 1 according t o burden of stat e ALASKA and local tax . (1) Dollars equals pe r $1,05 9 capita tax in fisca l 0 year 1978 . (7) °e'O Tax Foundatio n HAWAII map . General Tax Revenues Up 187% In 10-Year Period; State and Local Taxes Top $200BillionforFiscall978 Tax payments to state and loca l cade, at 187 percent. General tax col- The combined effects of popula- governments totaled $206.5 billion lections totaled $193 .6 billion in tion and price increases, if they were in fiscal year 1978, up 12 percent 1978, as compared to $67.6 billion a the only factors affecting taxes , from the previous year and 195 per- decade earlier . would have pushed tax payments u p cent higher than ten years earlier, ac - The 187 percent rise in state-loca l by 7.5 percent annually, said Tax cording to Tax Foundation analysis taxes occurred during a decade when Foundation researchers . Alternately, of data published by the Bureau o f the nation's population rose by 9 per- personal income growth alone would the Census. cent, consumer prices by 88 percent, have raised taxes by 9 .6 percent a The rise in general tax collection s personal incomes by 151 percent, year. Clearly, there were other force s (excluding unemployment insur- and Federal tax collections by 161 operating, since the average annual ance) was slightly less over the de- percent. (Continued on page 4 ) ATTENTION EDITORS : Monthly Tax Features is not copyrighted . Material may be reproduced freely . Please credit Tax Foundation . The Front Burner Largest Budget Hike s same two years, Federal transfer pay- By Robert C. Brown In "People" Programs ments for individuals will increas e Executive Vice Presiden t an estimated $73 .6 billion (from Tax Foundation, Inc. Much of the debate and contro- $224.9 billion to $298.5 billion) . In versy surrounding the fiscal 1981 1981, such transfer payments will ac - "Budget Revisions— budget has focused on the projecte d count for nearly half (48 percent) o f rise in national defense outlays . total spending by the Federal govern - Don't Lower the Bridge , However, this is not the area whic h Raise the Water " ment. reflects the sharpest increase in Fed - Tax Foundation economists als o eral spending, Tax Foundation econ - point out that these payments for in- Budgeting for the U .S . governmen t omists point out . dividuals are the largest of the out - is no simple task. Many assumption s The largest increases, by far, the y lays classified in the budget as rela- must be made in doing so, and for th e say, have been for those programs tively uncontrollable, representing most part, a case may be argued that providing transfer payments to or o n about three-fifths of the uncontrolla - one set of assumptions is as valid a s behalf of individuals not currently bles. These are also the program s the next. Only hindsight will validat e employed by the government . Ac- which reflect most clearly the impact anyone's projections . cording to the budget as proposed in of inflation on the budget, since auto- The Administration's revision o f January 1980, defense outlays will matic increases, tied to changes in the budget for fiscal 1981, however , rise by an estimated $28 .5 billion be- the consumer price index, are pro- represents a quantum leap in projec- tween 1979 and 1981 (from $117 . 7 vided annually for most of these pro - tion by political expediency . The billion to $146 .2 billion) . Over the grams. White House claims to have lowere d Looked at another way, national the bridge. It has actually raised th e defense outlays in 1975 totaled $85 .6 water—at least for the most part . doesn't seem to be happening right billion, about 26 percent of all Fed- now in Washington, D .C. The White House Fact Sheet on th e eral spending. The estimated $146 .2 As a step in that direction, I hav e new anti-inflation program release d billion budget for defense in 198 1 a very modest suggestion : If we take March 14 proposes $2 billion in will account for a smaller percentage the 1981 budgetary figures presente d largely unidentified spending "cuts " of total budget outlays—23 .7 percent. by the Administration on January 28 in fiscal 1980 and $13 to $14 billio n Over the same period, Federal out - in cuts in fiscal 1981 . However, the and cut 5 percent across the board , lays for human resource—or "peo- we would not only eliminate the $1 reductions do not relate to the budge t 6 ple"—programs, including transfer billion deficit projected for 1981 in as proposed in January . They are not payments to individuals discusse d the January budget document, but w e based on the estimates used in pre- above, will almost double in amount , would have a $15 billion dollar sur- paring that document. To reach his from $168 .7 billion to $336.2 billion . plus with which to finance produc- declared reduction totals, Presiden t In percentage terms, "people pro - tion-oriented tax cuts . Carter's staff used a new set of higher grams," which accounted for about Citizens--private and corporate— estimates . 52 percent of total spending in 1975 , have had to tighten their belts at leas t If the January assumptions are ap- will rise to an estimated 54 .6 percent that much in the last few years. Is it plied to the March estimates—whic h in 1981. unreasonable to ask our elected lead - budgetary consistency would see m Another substantial portion of Fed - to have demanded—the latest "cuts " ers to do the same ? eral outlays goes to finance the na- would in fact raise 1980 outlays b y tion's debt. Net interest is the interest $4 to $5 billion and would reduc e About Tax Features on the public debt (estimated at $79 .4 1981 outlays by only between $3 an d billion in 1981), and on tax refunds , $5 billion. The White House has sim - Tax Foundation, Inc ., is a publicl y less interest collected by the govern - ply inflated the outlay estimates and supported, non-profit organization en - ment and intragovernmental pay- "cut" most of the fat from those in- gaged in non-partisan research an d public education on the fiscal and man- ments of interest on the investments flated projections . agement aspects of government. Mem- of the social insurance and other trus t There is no point in belaboring the bers of Tax Foundation are urged to pas s funds in Federal debt securities. Net obvious fact that our nation is at a their copies of Tax Features along t o editors of their house publications . interest outlays rose from $23 .2 bil- major fiscal crossroads. There is little Original material in Monthly Tax lion in 1975 to $42 .6 billion in 197 9 need to attribute malice to the Ad - Features is not copyrighted and may b e and are projected to increase to $54 .2 ministration or the Congress in th reproduced freely by the news medi a e and others . Please credit Tax Founda- billion in 1981 . budgetary politicking now rampan t tion . The table on the following page in the nation's capital . What is For additional information write t o gives the broad functional grouping needed, though, is to use real num- Tax Foundation, 1875 Connecticut Av- enue, N.W., Washington, D .C. 20009, o r of budget outlays for selected year s bers in a consistent way when dis- call (202) 328-4500 . in both dollar amounts and as a per- cussing the budget, something which cent of total outlays . 2 Federal Pay in 198 1 Growth Trends in Personnel Benefit Costs, 1975-1981 a Federal Civilian and Military Personnel ° Will Claim One-Fifth (Dollar amounts in billions ) Benefits as a of All Budget Outlays Total percent of compensatio n Direct Personnel tota l One-fifth of all budget outlays - Year and benefits compensation benefits compensatio n slightly more than $125 billion-will 1975 $ 76 . 3 $59 .7 $16 .6 21 .8 % 1979 105 . 2 77 .2 28 .0`" 26 . 6 go into the pockets of Federal em- 1980 116 .
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