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17 Tax Review 1 (1956)

handle is hein.tera/tafoutaxt0019 and id is 1 raw text is: TAX REVIEW JANUARY 1956 Vol. XVII, No. 1 0 0 0 0 0 0 a 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Copyright 1956, The Tax Foundation, Inc., 30 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Rockefeller Plaza, New York 20, N. Y. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Government Finances in 1965 Decade's State, Local Tax Problems Seen Difficult, Bit Total Burden May Fall. M ANY government policy decisions being made today will affect us for decades. The President's Advisory Committee on a National Highway Program has recommended that we look forward at least ten years in planning a highway program. School construction programs in the states require planning for many years ahead. Many states today are under pressure to adopt new taxes that could become permanent. Deci- sions on long-range programs and policies ought to be considered in the light of the prob- able trend of all government expenditures and the total burden of taxation. Revenue Tied To Growth A projection of government finances presupposes a projection of national income and product and their major components. Apart from changes in tax rates, revenue will be governed largely by the growth in personal and corporate income and expenditures. Government expenditures on such functions as education and public welfare will be governed by the increase in particular age groups in the population and also to some degree by the growth in per capita income. In this study a range for GNP in 1965 is adopted from several projections made by other agencies. Government revenues and expenditures are pro- jected mainly in accordance with their past or ex- pected relationship to population, GNP, or relevant components of national income and product. The base year used is 1953-fiscal year ending in 1953 for government revenues and expenditures, calendar year for national income and product. Fluctuations in business activity make it hazard- ous to attempt to foretell the state of business even two or three years ahead. Since the level of business activity is one of the major influences on govern- ment finance, it is impossible to make unconditional proi2ctions of these finances. It is possible, however, to come reasonably close to the mark in projecting how much can be pro- duced with the resources that will be available in ten years time. That is to say, it is possible to project potential output with reasonable accuracy, but not realized output because that would mean forecasting This Tax Review is based on a Tax Foundation study Government Finances in 1965, which takes a comprehensive look at the Federal, state, and local tax and expenditure picture in 1965. The study utilizes authoritative sources and indi- cates what the tax and revenue situation may be a decade hence. 1