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18 Monthly Tax Features 1 (1974)

handle is hein.tera/taxfeaturs0018 and id is 1 raw text is: TAX FOUNDATION'S MONTHLY TAX FEATURES Copyright 1974 by Tax Foundation, Inc., 50 Rockefeller Plaza, New Fork, N.Y. 10020 January 1974 Vol. 18, Number I Maximum SS Tax May Top Average Income Tax Bill The new maximum Social that limit. The self.employed Security tax may be larger must pay 7.8 p.:rcent or a than the Federal income tax new naximum oh14,029. on ntore than half of some 80 For most family breadwin- million individual income tiers earnh,'g $13,200 this year, tax returns to be filed this the new ocil Securilty tax year, Tax Foundatiot, Inc. has suddf sly grown to half Cstinates. the size of hbe Federal income 'he $772 niaxhninin tax on tax. After deductiots and ex. etploycs (which must be eruptions, the ,ncomne tax niatched by employers for a tpkes about 11.7 percent of $1,51.1 total) exceeds theav- .s - paycheck, aco rilg to the trage of Federal incone taxes Fouuiato. paid on all returns with in- For honseiold with less coue up to $15,000-85 per. than $13,200 income, and cent o1 retirns in 1971, ac. that's the boat most families cording to the Internal are in, the Social Security tax Revenue Service. is even more formidable. All workers weith incomes A married couple with two over $10,800 will be affected, children amid $7,000 a year lnt only those earning 313. incone, for example, will pay 200 and over will feel the .f ill a Federal income tax of $106 bite of the latest increase in and a Social Security tax of the OASDHI witholding $,109.50, the same as last year. tax, which became law Jan. nary 3. Neverthelcm, the idea of Sos,e 29 million retired raising Social Security bene. persns, rich, poor ant in be. fits and taxes is apparently tseen, htoweever, will gc. an poitlar, observes Tax Fort- II percent increase in benefits elation. (The Senate voteit during the year from the So. 65.0 in favor of the latest cdil Security package Con. ieastre.) gress hastily wrapped tip be- With tile latelt increases, fore Christmas. benefits will liav risen 68.5 The 22 percent increase in percent for the January 1970. the tax for those earning July I, 197.1 periol. The Cot- $13,200 and above now im. sunrer Price Istle)- is expected poses tme 5.85 percent rate on to be tip about 28 percent all wages and salaries tsp to in the period. Smokers Burn but 'Butleggers' Profit There are a lot of smokers cigarettes of 8 cents per pack in New York City who don't grossed $2.2 billion in fiscal like the city's two.year-old 1973. Per'capita consumption cigarette tax lass. Bil, says Tax Foundation, Inc., there in the U.S. for te period was are a lot of crooks who do. 135.1 packs tip from 131.6 the The July 1971 sieasire year before. The average re. raised the price of the iidi. tail price of cigarettes cosn. vidlal pack fronit one to four try-wide list year was 41.8 cnts, depending on nicotine cents a pack. Couincil souirces estimate that illicit sales by buttleggers nos' topl $13 illion a year (tax.free). New York is the otly city in the Empire State with a levy ot cigarettes bt there are 370 other U.S. cities where a local tax is added to Federal ain state taxes. The local taxes grossed $116 million in fiscal 1973. Tax Foundation also noted that with all states now levy- ing taxi's ott cigarettes, col. lections totalled over 33.2 billin in the fiscal year eniled last June. The hiliest state tax on a 1ack of cigarettes is Connec. l tcul's 21 cents. The state's rise of 15 cents over Its old rate of 6 cents equals what the tobacco indtstry says a pack of cigarettes would cost sitl nt taxes-15 cents. Tarheels Still Lowest The lowest rate is North Carolina's 2 cents. New York officials say tle low tax has ntade ile state a prine source of rigarettes uttlegged in higiter-taxitg areas. New York led al states fit total tobacco proticts rev- eues ii 1972 wish $273.3 nmilliot. California collected $2.16.6 million, Texas $231.6 milli, Pennsylvania $222.6 millioss. 'rhe Federal excise tax on FIRST CLASS. Postage rates will have to le raised, says the Postmaster Geineral, to cover the rising costs of tie Postal Service. Some costs risihg from the Service's new headqtuarters in Washington have been provided by the General Accounting Office. It cost $.18,500, for example, to furnish the Postmaster General's office and another $130,600 for the adjoining reception area, press confer- ence room and a room for the Board of Governors. Items incltted in the breakdown for the PMG's office: carpeting, $11,666; draperies, $5,999; pantry, $5,- 280; two sets of walnut doors, one with and one without the Postal Service seal, $3.671; convertible couch, $1,043; sofa. $821; and marble topped lavatory, $800. FLEXIBLE PARKING SPACE. A place to park 4,000 cars - over the adjoining tracks -seas a big attraction to converting Washington, -ME For the first time in over 40 years state income taxes produced more revenue in fiscal 1973 than depresaionborn sales taxes. The states collected $15.6 billion from Individual and $5.4 billion front cor. sorate income taxes. Sales tax collections were a record $19.7 bil. on. Total state tax collections came to $67.9 billion, 13.5 percent above 1972, according to Tax Foundation, Inf. - To olumn moss otutlbte without charge on utt5 Government Pumps More Billions Into Rising Health Care Bill With tile strong national drive to pice mnore government. supported health care at the disposal of every American, Tax Fouitmtoti, Ise. points out that Congress faces a year in which billions of Federal dollars ride on this single issue. The broadened Administration proposal for a national health insurance program taxes, tax credits and general due this year may involve revenue. about $5.6 billion in new Fed- One plan that has received eral fuids. Tax Foundation mnch )atentiot, the Kennedy. notes, however, that the doz- Griffiths bill, would increase ens of proposals in Congress Federal health outlays nearly embrace a wide swveep o $ $60 billion, according to the financing costs and methods research organization. This involving premiums, payroll would represent the Federal taxpayer's assumption of many costs previously met by tndi. viduals, private carriers anid state atd local governments. All of the proposals for a h national prograi (there were more than 45 Introduced in a, the 92nd Congress) would 11 increase the costs of society as a whole for health care e I and all womd expand Federal 0 government Payments. For the U.S. taxpayer, at all government levels, the V Foundatio notes, there will be nothing new about in. creased iemasnds for health expenditures. In fiscal year 1973, public payments for D.C.'s Uniion Station into a health care reached a record Natiotnal Visitors Center in $17fi per capia. This was up 1967. frons $158 in 1972. In 1965, per capita spenling was $48. The govertnent said that Total health spending in if the ownoing railroads wtold fiscal 1973 of $94.1 billion modernize the station atd was sip 9.1 billion-il per. build the parking facility, cent-fromn 1972. Public out. Uncle Sotu ssosid ent tile 'lays totalled $37.6 billion, of package for $3.5 million a which $2.1.6 billion was Fed. year, and recoup about $2 eral funls. In 1972 public million a year from parking spendine was S33.4 billion, of fees. which $22.1 billion was from In the meantime, the rail. Federal sources. roads have gone bankrupt. TF noted that according to The number of proposed figures of the Department of parking places was cut to Health, Education and Wet. 2,500 in 1972. and more re- fare, for every dollar spent in centlv to 1,200. And Conress fiscal year 1973 on health has already aphropriated $8.6 care, 40 cents came from pub. million to the proiect it lie coffers. In 1965, less tan started at no cost to taxpay. a quarter of the health dollar ers. was from government sources. Leftover Tax Decisions Move To Front Burner The past year seas prologue for change in Federal tax laws and Congress its 197.I is expected to be more occupied with 'tax matters tian in ally rear iut recent memory, Tax ndallotn, Inc. reports. More isnd more nmeihets of Congress are displaying as eagerness for tax revision fol. lowing a year that saw lengthy Congressional hearings itn a virtal flood of legislative proposals, but little action, the research orgaiaion said. Chairtnan Wilbur D, Mills of the House Ways anti Means Conimittee had opti. mistically scheduled House action on a sax bill by lst June. A f(ill reviewe of the 1973 efforts is given in a year-em Tax Foundation report on Tax Developotents in 1973. The TF report sees hints of a softeitg of White House opposition to.a tax in. crease atid noted the possilil. ity of the use of tax measures to promote energy conserva. tion. The Administration has si. reatly urged a tax increase oin the windfall profits of oil producers. Tie ueasire was place] at the toip of tile agenda for the immediate at. tention of the Ways and ieatis Committee when the next session opens this mouth. All of the 10,000 U.S. oil producers would be subject to the 'windfall profits tax (to apply only to crude oil). The President tied sile useas. ure to a SI-a-barrel increase authorired in December. Ti increase would be subject to a tax of 91/g cents and the rate wcoild rise isih prices, reaclting a maximum of 85 percent. As for general tax revision, Tax Fsiundation expects ton' that it is going to couie in stages, rather than as a pack. age. Sose of tile first actions may conrern provisions of in. come tax law that have mse tinder recent attack as iu. equitaiie, including possible change s capital gaiss tax provisions. The 1973 review noted that an clenent of uncertainty for tax matters this year is tie fusture course of Federal spending. Congressional staff experts estimated it December that the probahle slowdown of the economy this )ear may bring a deficit in the Federal bud. get in the neighborhonl of S20 billion for fiscal 1975. This compares to estimates of a deficit Jtst tnder 33 bil. lion for the fiscal 1974 year ending July I. Like Apples and Oranges In 1932 states collected S7.1 million from individual it. come taxes, S79 million from corporate income taxes ant $7 million from the then new general sales and use taxes, according to Tax Foundation. In the past fiscal year, col. lections from those sources totaled $15.6 billion, $5.4 hil. lion and $19.7 billion.