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1975 Memorandum on the Allocation of the Federal Tax Burden by Standard Metropolitan Statistical Area (SMSA) 1 (1975)

handle is hein.tera/malfthouts0005 and id is 1 raw text is: )MORANDUM ON THE ALLOCATION OF THE FEDERAL TAX BURDEN BY STANDARD METROPOLITAN STATISTICAL AREA (SMSA) Fiscal Year 1975 This memorandum presents estimates of the Federal tax burdens on the residents of 125 of the nation's largest (by population as of July 1974) SMSA's. The 125 SMSA's included in the study together account for approxi- mately 88 percent of the Personal Income and 86 percent of the population of all SMSA's; and, for approximately 69 percent of the Personal Income and 63 percent of the population of the entire nation. The estimates presented here are somewhat comparable to the state estimates which the Tax Foundation has prepared for many years; estimates of the distribution of the Federal tax burden by state for fiscal year 1977 are available in Tax Foundation's Mem- orandum on the Allocation of the Federal Tax Burden and Federal Grants-in-Aid by State, Fiscal Year 1977, April 1977. Since tax collections data published by official government agencies are not designed to reflect the geographical origin of Federal taxes, in terms of the ultimate incidence or burden, special estimating techniques are required to ascertain the taxes actually borne by the residents of each state or SMSA, as distinct from the places where the tax payments are initially made. For example, Treasury Department figures show that the bulk of Federal excise taxes on tobacco and tobacco products are collected in the few major tobacco-producing states, while the burden of these taxes rests on consumers of tobacco products in all areas. The bases used by the Tax Foundation for estimating the tax burden in SMSA's, together with the amounts of tax collected in 1975, appear in Table 1. Estimates of the Federal tax burden, both total and per capita, appear in Table 2, which also shows the percentage of the total Federal tax burden falling on the residents in each of the 125 SMSA's. Two sets of data are presented, one for taxes which go into Federal funds (excluding trust fund taxes) and the other for total taxes (including trust fund taxes). t1he total tax burden is consistent with the official unified Federal budget concept introduced with the 1969 Budget presentation. The tax burden estimates are for fiscal year 1975, the latest for which applicable base data are available. In that year per capita Federal taxes for the nation as a whole averaged $1,272 ($1,419 in the 125 SMSA's covered here.) In fiscal year 1977 per capita Federal taxes nation- wide are estimated at $1,564, about 23 percent higher than in 1975. Therefore, on the average, the per capita tax burdens shown in Table 2 should be increased accordingly to obtain an estimate of current burdens. Some of the questions which allocation estimates help to answer are these: (1) Do particular types of Federal taxes tend to impose a greater burden in some areas than in others? In other words, does one pattern of Federal taxation force the people of some areas to pay a greater proportionate share than would be the case under a different tax structure? (2) How do the Federal taxes borne by the people of a particular area compare with the benefits received by residents of the area from Federal expenditures?

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