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Tax Features Volume 20 Number 3 April 1976

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Tax Features Volume 20 Number 3 April 1976 MONTHLY TAX FEATURES Toward bette r government Founde d 1937 Tax Foundation Inc 50 Rockefeller Plaza q New York, New York 10020 U 212-582-0880 q Volume 20, Number 3, April 1976 May Day Can Be Celebrated As "Tax Freedom Day " May Day takes on added significanc e this year. Calculations show that May 1 is the day when we have all finished paying our taxes . Tax Foundation has dubbed it "Ta x Freedom Day." It is calculated on th e basis of how many days the average tax - payer will have to work in 1976 to earn enough money to fulfill all his tax ob- ligations—Federal, state and local. Last year Tax Freedom Day was celebrated April 28, but revised figures from the government on income, popu- lation and estimated tax receipts no w show that the actual date was April 30 . The latest calendar date for Tax Freedom Day was in 1974 when it oc- curred on May 4 . It has moved back in 1975 and 1976 due to the tax cut s enacted by Congress in those years. Breaking their calculations dow n further, Tax Foundation finds that th e time required in an eight-hour work day to pay all these taxes comes to tw o hours and 39 minutes . And that's u p from last year's tax bite of two hour s and 35 minutes . (Continued on Page 2) Tax Bite in the Eight-Hour Day 197 6 Item Hours and Minute s Taxes, Total 2 hours 39 minute s Federal 1 hour 41 minute s State and local 58 minute s Food and beverages 1 hour 5 minute s Housing and household operation 1 hour 32 minute s Clothing 29 minute s Transportation 39 minute s Medical care 25 minute s Recreation 19 minute s All other' 52 minutes 'Includes consumer expenditures for items such as per- sonal care, personal business and private education ; an d savings . Black and white prints of this cartoon are available to editors. Source : Estimated by Tax Foundation as of March 15, 1976 . 1 About Tax Features National Tax Conference Program Set Original material in Monthly Tax Donald I . Rogers, well-known finan- tion. Professor Lowell Harriss of Co- Features is not copyrighted and ma y cial writer and syndicated columnist lumbia University and a Tax Founda- be reproduced freely by the news media and others. Please credit Ta x for the Hearst Newspapers-and King tion economics consultant, will discuss Foundation. Features Syndicate, is scheduled as th e "The Capital Force" at the Monday Tax Foundation, Inc., is a publicly principal dinner speaker at the annua l luncheon meeting. supported, non-profit organizatio n National Taxpayers Conference i n Tuesday's sessions include Hon . engaged in non-partisan research and Washington, Tuesday, April 6 . The public education on the fiscal and Robert Hampton, chief of the Civil management aspects of government . dinner meeting is the high point of a Service Commission, speaking on "Fed- Members of Tax Foundation are three-day session attended by official s eral Compensation Policy Proposals" ; urged to pass their copies of Tax of state taxpayer organizations . Nearly Nancy Hayward of the National Com- Features along to editors of their thirty states are represented at the meet- mission on Productivity and Wor k house publications. ings hosted by Tax Foundation . Quality, who speaks on "Productivity For additional information write t o Speakers scheduled to take part in the Tax Foundation, 50 Rockefeller in the Public Sector" ; and Elsie Watters , Plaza, New York, N. Y. 10020, or call conference opening Monday, April 5 , director of research, Tax Foundation . (212) JU 2-0880 . include Senator Carl Curtis (Neb.), who Dr. Watters will discuss "Public Em- will discuss "The Constitutional Ap- ployee Retirement Systems ." proach to Balancing the Budget," and Wednesday's speakers include Pris- Senator Harry Byrd (Va .) on "Taxes cilla Crane, director of information , and the Economy." Office of Revenue Sharing, on th e Other seminar session leaders sched- "Outlook for Congressional Action o n uled are : James Kelly of the House Revenue Sharing"; Bill Thurman of the Ways and Means Committee on "The General Accounting Office, on "Re - Social Security Financing Dilemma" ; form of the Categorical Grant" ; and Professor Martin Feldstein, Harvard Terry Mattock of Tax Foundation, o n economist, on "The Issues in Unem- "Grant Consolidation Proposals." "Increased capital formation is essen- ployment Insurance ;" and Maynard Dinner Speaker Donald Rogers wa s f tial to meeting our long-term goals o Waterfield, director of Tax Founda- for 16 years business and financial full employment and noninflationary tion's Washington office, on "Congres s editor of the New York Herald Tribune growth." and the 1977 Budget ." and a syndicated daily columnist . —Gerald R . Ford S. Keith Anderson, who heads the Rogers' articles critical of governmen t Montana Taxpayers Association, i s economic policies, which he predicte d "I strongly believe that the individua l chairman of the National Taxpayer s would lead to inflation and unemploy- wage-earner has the right to spend hi s Conference . ment, were blamed for President Ken- own money on the goods and services he Keynote speaker is Robert C . Brown, nedy's cancelling the White House wants, rather than having the Govern- executive vice president of Tax Founda- subscription to his newspaper . The ment increase its control over the dis- predictions, nevertheless, came true . position of his income ." the corporation income tax has becom e —Ibid. a punitive tax on the America n * * * worker." —Peter F. Drucker "Tax Freedom Day "If people cared more, they would * * * y (Continued from Page 1) create a more liberal society, and b "The biggest obstacle to job creation liberal I mean a society with more in the U.S. today is Congress . ." May Day is an ancient spring festival . freedom. A free society such as ours ca n —Business Week, Dec. 29. It is also a Marxist holiday. And it has be brutally indifferent to some things . * * * become, in the international language But in the main, liberty is the concern of of air navigation, a cry for help . all of us, and this is what liberalism is all "HELP . ONE TAX BITE I S about." ENOUGH . the double taxation of "Our research does not go into tax- payers' reactions to their responsi- —Daniel Patrick Moynihan dividends is an inequity that needs im- * * * mediate attention . We' must make it bilities to pay taxes," says Tax Founda- attractive for individuals and corpora- tion's Bob Brown, "but it would be m y "Our economic system has bee n tions to put their capital to work pro- guess they are happy and relieved to seriously damaged by Congress's fiscal ductively . The double taxation o f have completed this obligation . irresponsibility." dividends encourages debt financing Whether May Day is perceived as a —Rep . William L. Armstrong (Colo .) and discourages equity financing . It's joyous spring festival or a cry for hel p * * * not an us-vs .-them issue. We're all in remains to be seen. In my own view , "With pension funds emerging as the the same boat." four full months a year to work for th e major owners of American big business, —Dean Witter (Continued on Page 3) —This issue is printed on 100 percent recycled paper- 2 "Tax Freedom Dad° Workers Get 76% of National Income (Continued from Page 2) government is just about enough," he Wages and salaries in the U.S. con- total income for the year, which stoo d adds . tinued to bound ahead in 1975 to a new at $1,209 .5 billion . In terms of the amount of work t o high of $921 .4 billion, according to Tax While the percent of national incom e earn the money, taxes are the largest Foundation. paid to employees in 1975 was down a item in the average family budget. That's 76 .2 percent of the nation's fraction to 76 .2 percent from the 1974 Housing and household operations are far behind at one hour and 32 minutes. Food and drink are one hour and fiv e National Income by Type of Income minutes, transportation is 39 minutes, Selected Calendar Years 1950-197 5 medical care is 25 minutes, recreation 19, and all other items such as savings National Compensa- income, tion of Proprietors' Corporate Al l add up to 52 minutes . Year total employees income' profits' Y other' The two-hour and 39-minute tax bit e Amount in billions n out of the working day breaks dow 1950 . $236 .2 $154 .8 $38 .4 $33.7 $ 9 . 3 into one hour and 41 minutes for Fed- 1955 . 328 .0 224 .9 42.5 44.6 16 .0 eral taxes, and 58 minutes for state an d 1960 . 412 .0 294 .9 47.0 46 .6 23 . 5 1965 . 566 .0 396 .5 56 .7 77 .1 35 . 6 local taxes. Last year's breakdown wa s 1970 . 798 .4 609 .2 65 .1 67 .9 56 . 2 1971 . 858 .1 650 .3 67 .7 77 .2 62 . 9 one hour and 38 minutes for Federal , 1972 . 951 .9 715 .1 76 .1 92 .1 68. 6 and 57 minutes for state and local taxes . 1973 . 1067 .2 797 .7 91 .7 100 .2 77 . 6 1974 . 1141 .1 873 .0 85 .1 91 .3 91 . 7 1975' 1209 .5 921 .4 83 .3 102 .1 102 .7 Tax Bite in the Eight-Hour Work Day -Historical Comparison s Percent of national income 1950 . 100 .0 65 .5 16 .3 14 .3 3 .
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