About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

LOG IN
LOG IN


1967 Memorandum on Allocation of the Federal Tax Burden and Federal Grants-in-Aid by State [1] (1967)

handle is hein.tera/mallocbufe0007 and id is 1 raw text is: MEMORANDUM ON ALLOCATION OF THE FEDERAL TAX BURDEN AND FEDERAL GRANTS IN AID BY STATE Since Federal tax collections data do not accurately reflect the tax burden by state, Tax Foundation, in cooperation with other organizations, has developed a special allocation formula to distribute the Federal net budget tax burden by state. This distribution of the Federal budget tax burden as estimated for fiscal 1967 is given in Table 1. Tax Foundation has gone a step further in the formula derivation to include trust fund tax receipts in order to distribute the total Federal tax burden by state. The estimates for fiscal 1967 are set forth in Table 2. The bases used for deriving the formulas appear in Schedule A. Essentially the same method and bases have been used for the derivation of these formulas for the past six years. However, a change this year in one base for allocating the corporation income tax burden is a statistical revision which limits the compara- bility of the current estimates and those for prior years. Previously, one half of the corporation tax burden was allocated in proportion to the distribution of dividends by state. For the current estimates, total property income (see Survey of Current Business, August 1966, pp. 14-16) was substituted for dividends in this portion of the allocation. One purpose for which the Federal budget tax burden estimates can be used is demonstrated in Table 3, which shows the tax cost of Federal budget grants (financed through general fund taxes) to state and local governments. Table 4 shows the tax cost of total Federal grants to state and local governments -- that is, including payments financed through trust funds as well as through the general fund. It must be borne in mind that these comparisons of Federal assistance which each state receives per $1.00 of its estimated Federal tax burden for aid payments do not actually indicate the entire cost which the states incur for obtaining Federal grants. These comparisons, with a few exceptions, do not take into account the costs to the states of administering the programs for which the aid is granted, nor the amounts of matching funds which the states must make available out of their own revenues in order to qualify as recipients of these grants. Further explanation of the formulas -- their derivations, uses, and limi- tations -- is contained in Tax Foundation's Research Aid No. 3 (Revised), Allocating the Federal Tax Burden by State, December 1963. Tax Foundation, Inc. March 1967