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Tax Features Volume 24 Number 2 February 1980

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Tax Features Volume 24 Number 2 February 1980 MONTHLY TAX FEATURES Toward Volume 24, Number 2, February 198 bette r 0 governmen t Founde d 1937 Tax Foundation.lnc. 1875 Connecticut Ave., N .W. q Washington, D .C . 20009 q 202-328-4500 q What Will A Half-Trillion $ Tax Bil l Worker's Tax The half-trillion dollar Federal ta x • Michigan—$23 .6 billion Dollars Buy? bill has arrived . • New Jersey—$19 .9 billion Who is John Q . Taxpayer and how Using the data from the Adminis- • Florida—$19.4 billion much will he pay the Federal govern- tration's new Federal Budget, Ta x • Massachusetts—$13 .3 billion ment in taxes this year ? Foundation economists estimate that Vermont had the lowest total tax John Q. Taxpayer, a proto-typical the total Federal tax burden will burden of any state ($0 .9 billion), fol- U.S. worker, is the sole source of sup - reach $506 .3 billion in the current lowed by Wyoming ($1 .16 billion) , port for himself, his wife, and his two fiscal year (1980) . The total burde n South Dakota ($1 .2 billion), North children . He earns $20,000 a year, th e for FY 1979 was $450 .8 billion, whil e Dakota ($1 .3 billion), and Alask a estimated median income of a full - 1981's is projected at $580 .9 billion . ($1 .47 billion). time, year-round worker. Citizens in the top paying states Mr. Taxpayer will pay an estimate d Federal Tax Collectio n turned over to the national govern- $5,451 in total taxes to the Federa l by Type of Tax ment more than $292 billion, ac - government this year, according to Fiscal Years 1979-1981 a counting for about 58 percent of al l Tax Foundation researchers . Of this (Billions) Federal taxes collected . total, Federal income taxes will claim Tax 1979 1980 1981 Predictably, the total dollar $2,114; social security taxes, $1,226 ; Individual income $217.8 $238 .7 $274 .4 amounts of the Federal tax burde n and indirect taxes, $2,111 . Indirect Corporation income . 65 .7 72 .3 71 .6 tend to be highest in states with the Employment' 120.1 138 .6 161 .6 taxes include such items as em- Unemployment' 15 .4 16 .8 18 .6 largest populations . Per capita tax ployer's share of social security taxes , Estate and gift 5.4 5.8 5.9 burdens, on the other hand, are gen- Excise" 18.7 26 .3 40.2 corporate income taxes, excise taxe s All other taxes 7.7 7.7 8. 5 erally highest in areas where averag e on liquor, gasoline, tobacco, and ai r Total $450.8 $506.3 $580.9 incomes are greatest. The ten state s travel. In one way or another, thes e "For 1979, data are actual ; for 1980 and 1981, as esti- with the highest estimated per capita mated in the budget presented in January 1980 . indirect taxes are paid by people i n ""Includes social security (OASDHI) and railroad re- Federal tax burdens for FY 1980 are : tirement taxes . the form of higher prices, lower earn - "State payroll taxes deposited in Treasury and Federa l • Alaska—$3,65 2 ings, or smaller returns on invest- unemployment taxes . • District of Columbia—$3,06 1 "Includes $7.7 billion in 1980 and $20 .9 billion in 198 1 ments. for the proposed new "windfall profits" excise tax . • Connecticut—$2,84 5 Source : Office of Management and Budget . How and where the Federal gov- • Illinois—$2,77 9 ernment spends Mr . Taxpayer's dol- State-by-state tax burdens sho w • New Jersey—$2,71 6 lars is shown in the table on page 3 . corresponding increases, althoug h • Nevada-$2,705 Nearly one-third of J . Q. Taxpayer' s the ten highest paying states remain • Delaware-$2,61 9 contribution to Federal expenditure s unchanged from last year : • Maryland—$2,59 9 will go to income security—that is , • California—$58 .8 billion • Michigan-$2,56 2 social security benefits such as retire - • New York—$42 .5 billion • California-$2,55 7 ment, disability and other pay - • Illinois—$31 .9 billion Mississippians, per capita, sent th e ments—and welfare. National de - • Texas—$30.9 billion fewest tax dollars to Washingto n fense has the second highest clai m • Pennsylvania—$26 .7 billion ($1,450), followed by citizens of Ar - (Continued on page 3) • Ohio—$25 .5 billion (Continued on page 4 ) ATTENTION EDITORS : Monthly Tax Features is not copyrighted . Material may be reproduced freely . Please credit Tax Foundation . 1 The Front Burner Byrd Calls For Balanced Budget By Robert C. Brown The following remarks on the Fed - three-quarters of the spending in - Executive Vice President eral budget and spending levels may creases proposed by the President are Tax Foundation, Inc. be of interest to readers of Monthl y outside of the defense area . Tax Features. They were delivered by News accounts indicate that hug e Senator Harry F. Byrd, Jr., (I-Va .) on budget increases have been in the de - "The New Federal Bud- the floor of the Senate, January 29 , fense area. That is not correct . Three- 1980 . quarters of the increases have bee n get—the Numbers Behind outside of the defense area . the Numbers" MR. HARRY F . BYRD, JR .: Mr. As a matter of fact, the President' s President, Public Law 95-435, ap- budget document asserts that he rec- proved October 10, 1978, decrees that ommends $20 billion in new and ex- President Jimmy Carter's Budge t "Beginning with fiscal year 1981, th e panded domestic programs . has been on the front burner since it total budget outlays of the Federal Mr. President, I think the time ha s was presented to Congress on Janu- Government shall not exceed its re- come for the Congress and the Presi - ary 28. Large as the totals are, they ceipts. " dent, acting together, to put this Gov - fail to show the true size of eithe r Yesterday, President Carter sub- ernment's financial house in order. revenues or spending by the Federa l mitted to the Congress his budget fo r The people of our Nation are suf- government for Fiscal Year 1981 . fiscal year 1981, which begins on Oc - fering under an inflation of 13 per- The White House estimates re- tober 1 of this year. His proposals in - cent. ceipts of $600 billion, outlays of $61 5 clude an increase of $16 billion i n The new budget by the Presiden t billion, and a deficit of $15 .8 billion spending for the current year and a projects revenues which are approx- for FY81 ; but viewed under a differ- further increase of $52 billion fo r imately double the revenues taken in ent budgetary approach—the gros s 1981, for a total spending increase o f by the Government since President transactions concept developed by $68 billion. Carter became President . Tax Foundation economists—the His budget projects a deficit for th e The only reason the deficit is not numbers are significantly higher . current year of $40 billion and a def - higher is due to the huge amounts of The Gross Transactions Budget icit for 1981 of $16 billion . taxes that the Government is collect- Concept factors into budget totals th e Mr. President, I think an over- ing from the American people. "off-budget" items, certain types of whelming majority in the Congres s In my judgment, it is the duty o f funds or transactions shown only o n and the Nation agree that increase d Congress to get hold of these spend- a "net" basis in the current budget, outlays for defense are essential, but ing programs and bring them unde r and billions of dollars in "off-settin g control, in the name of fiscal respon - receipts" which are treated as offset s sibility. If Congress and the Presiden t against outlays—or negative expen- are to obey the law, the law now o n ditures—in the unified budget . Recently, efforts have been mad e the books, the 1981 budget must be Simply put, the gross transaction s to restore some agencies to on-budge t balanced. The law requires it . concept eliminates these technica l status, but progress has been slo w I conclude as I began : Public Law accounting practices so that every- and sporadic . A number of exclu- 95-435, approved October 10, 1978, thing paid to the government by th e sions endure, and their existence dis- decrees that "Beginning with fisca l public is counted as budget receipts , torts the picture of the Federal gov- year 1981, the total budget outlays o f and everything paid out by the gov- ernment presented in the President's the Federal Government shall not ex - ernment to the public is counted a s budget. ceed its receipts ." There are only 1 8 outlays . On that basis, FY81 receipts There may be little or no malice i n words in that piece of legislation . total $719 .1 billion; outlays, $763.2 this distortion, but it does tend to Will Congress comply? billion; and the deficit rises to $41 . 7 camouflage the true dimensions an d billion. nature of the Federal government ' s Why the discrepancy? Presidentia l economic involvement, in terms o f Nondefense Spending budgets now conform to the unifie d transactions with the public . Clear- budget concept adopted by Congress ing up that picture is a big step to - Expenditures for the elderly no w in 1969 . This sought to provide a ward knowing where we are heade d claim nearly a quarter (23 .3 percent) comprehensive Federal budget, wit h and how much it will cost to get of all nondefense dollars spent b y exclusions held to a minimum; but there.
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