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12 Monthly Tax Features 1 (1968)

handle is hein.tera/taxfeaturs0012 and id is 1 raw text is: TAX FOUNDATION'S MONTHLY TAX FEATURES Copyright 1968 by Tax Fondation, Inc., 50 Rockefeller Plaza, New York, N. Y. 10020 January 1968 Vol. 12, Number 1 Fears '68 Tax Hikes Will Cancel Raise Niueteen hundred and sixty- eight may be a banner year for Charlie Green, a fairly repsre- sentative American, says Tax Foundation. tlt, adds the re- search otganization, die banner iay tiiin ot to be a stoT1n ait ,nng flag. Charlit., who lives itn ile sib itihs of a laige city, is uarticti aid the father of t,'%o children. Cuiteitly, lie earns $10.00A )ear hitt expects to get a $t0o. a-aea raise sometime between tns,' and Croundhog Day (Flt. 21. lit (:harlie -- anti all the otiler Charlies in the U.S.-are eculerlled, says 'ax Foundation, In!. ati Iw-hat a liossilte Fed- eral incoit tax srchalge, tile increase iii social security taxes, hIts te likely 3!/2 peicent rise in the cost itf living during 1960 is going It) do to his raise. Ott a $100 raise such as Charli, e'pects, the regular in. coltie tax ,woild atmount to $68. If ass 8 percent income tax siir- ehaige is passed in the current sissit i (f C'.ongrcss, in Charlie's ease, it could amnoint to as niuch as $6 in Charlie's $100 raise or $95 on his total income. T'rouigh 1967, Charlie's wages in excess o $6,600 s-e,.! free of I tab for social security taxes. h:ut hcause of ive new, iroad- ened base, Charlie is going to he hit for $52.80 more for his old. age tax. 'hat will, of course,coune It of this raise, too. Formerly, the bat' was $6,600. It becomes $7,800 this year, bit tite per- eentage (4.4.) lie pays rinialsIS ite san . T he rate goes 'u! ) to 1.8 percent it 1969, an, by 1971. (harlie will be paying $115 mor' in social security taxes ihan he dill in 1967. Witlh Inlation filling in an en' larintg pars t fthe pictlre, econ. insts expect tite Consumer price itidex still go sip by abotit 3!/ 1percent in 1968. If this turns Oti to be site case, Charlie and his fasnily will have to lay out $9 stntre of his raise ($290 of his total income )to keep tip witi the higher cost of living. From site vansage point of a brand new ycar, says the Foun. datson, it looks as though Char. lie is going to come out with solitesthing less than that $400. In itemized form below are given site effects of new tax cltiges. social securily tax in. creaseis, asid inllation Oil Char- lie's total income, including his raise: c lttiti's p r Ii . . ........ .. t ,s . ist , sottto iti tat 53 Inssriat. Ison is Si ltStU y ii ,,,. $ Pitt i ts i lse . State.. . . .... 2I , Into Dnit os s . ........t..... ... Total tlriose 0, total itcom . i- 7-3 Which leaves a New York Charlie $73 behlinl his salary inerease. Not ilitld in this tabula. tion, nites the Fouindation, Muiist lie olher lrosseclive state tax ikeis swhii, lik (le proposed N.V. levy, will ditiiinsih incomes if' 1968. Ilast year 20 states and tlousands of loc'al governtent units Iikeld thir taxes. Ev1 ithe stamp Charlie sill iti' se send in i s inme e iax rellt Its io Fede-al and state got-. einiens (it the 38 slates note taxing individual incm e) will crmt Ili?, a Ipenny more. The Income Tax Goes to Town 1967 Rate of City Income Tax on Residents. by City Size 100 ate 40 Cuit iIthsooslnlIt it Asnericau city's inconme tax rate, says '.Tax Foundatlon. Site., ores- 1ioutdst roughly with its size. 'lie chart shows ftiat 88 percent of the nation's largest cities ind 56 percent of its smaller ones impose an it. coie tax at a rate of I percent or higher. Similarly. 'I-I percent of the stllaler cities but only 12 percent of the larger ones have rates lower titan I ter ens. Of all cities levyitg an income six, 64 percent inipose a rate of Iterceit or higher. 'The reat bulk of ineometax clites, accorhilg to a new Foundation study Cly Income Taxes, hate fewer thtan 25,000 ilialbtants, but the city income tax nonetheless appears to be primarily a big-city phenmenon. Abiout 40 percent ol cities with 500,!tt0 or more population, but only 9 percent of cities wiit 58,000 to 100.000 poplation had begun an inonie tax hsy 1967, says t e Fouttlition's stud y. (2 eoluins malt available without charge on reqtlet) State Cigarette Tax Rates Rise; Rut U.S. Levy Stays 8c Since 1951 The current, 8-rent- a -pack, its rate from 8 to 13 cents, nak. Federal cigarette sax has been tng it the highest in tite land, in effect for 16 )cars, Fiax Form. Previously, New Jersey, Wash. dation, Inc. 'loinis ot. For all ington end T rxs wth I a-ceots. these years the tax has been n-opack rates were the highest. bringing in, on aerage, some Net state colleclions from site $1.7 billion a ityeag , soi apakrtseesteigs. '1 icigear. arette tax hit the $1 million 'le longest lasting Federal levelln 1923, the$1 billion mark cigarette tax rate-just over 20 in 1962 and were half way to years-notes the Foundation, kite $2 billion point in 1966. was the 6-cents-a-pack tax, front 1919 to niM-19.10 when an ad- Like Kitty, 'Temporary' ditiotal half cent tax was ap- plied. Next longest st-as a I cent Tax Grows To Cut Size rate tiat lasting frn 1883 to Ring out the old year; ring 1897. . in ite new, says Tax Founda- Federal tax collections ot tig- Clan, Inc., noting that in 1968, arettes first brought in $1 million as in other ntears, many a tax in 1890 (tie rate was I-cent-ao proposal that starts out on a pack). Collections reached ithe 'temporary' basis may wind sip $1 billion mark in 1946 when as a permanent levy. site rate was 6.5 ceits-a-pack. As evidence, the research o. The $2 billion collection level ganizasion points out that within was reached in 1963 wt the the month, a temporary 3 per- 8-ceit rate. cent sales and use tax enacted in hlowever, points out to Foun- Massachusetts in 1966-sup. dation, in the period IP.'t-1967, posed to expire on December 31, while site Federal rate held at 8 1967-hs been made perma- cents, most of the states boosted nent. their rates two or more times. And, even before a teron Three states (Wisconsin, Nes rary I cent a gallon gasoline Jersey and Connectcut) upped tax rate increase (from 6 cents their rates five times between to 7 cents) in Idaho could take 1950 aud 1966; many increased effect on January I this year, the iheir rates four times. levy was made permanent. The Cigarette tax rates are still ris- temporary tax was supposed ing as states cast alioit for rev. to expire December 31, 199 and esitics to meet growing dcpands was calculated to bring in about for services, says the Fountation. $6 million. In 1967, II states raised their As a pernsanent tax it can rates wt Pensylvania lifting bring in more, for, as the Foun. dation points out, tite Federal No Tax Required tax on gasoline started out-at A tax qtestion ihot left the o) I cent per gallon-as a tempo. eratcrs of a hovercrafi np iii the rary proposition during the De- air-literally and figuratively- lression. has now been resolved, says 'rax Thatemporarytaxhasbeen Foundation, Inc. on the books more than 35 years, rThe qustion: is the cost of a tIte Foundation pointed out, his ride on an air cushion vehicle been increased several times (it subjcct to tite 5 percent Federal is now 4 cents) and has grossed tax on transportation of persons nearly $33 billion. by air? A U.S. Treasury report for Since tie vehicles rio not use fiscal 1933, shows that at the airlanes, airports, or any of the 1932 1 cent a gallon rate, col- facilities eomtonly used by con. lections anoionted to about $125 ventional aircraft, tite tax does million. The rate scent up to 1.5 ot apply, ruled the Internal cents in 1933, backed down to Reentue Service. The U.S. col- I cent in 1934, and went back lected $1110 million on the air npI) to 1.5 cents in 1940 where it transluortation tax in fiscal 1966, remained until 1951, when it be. up $l4 million from the previous canme 2 cents, then 3 cents in year. 1956, and 4 cents in 1959. Study Sees City Income Tax Hitting Half Nation's Big Cities Back in the early I100's, Charleston, South Carolita, hit on a new method of raising city revenc-a city peisonal income sax, notes Tax Foundation, Inc. This levy was eventually abandoned and wasn't tried again in any U.S. city until 1939. Ioweser. lost ttle fas been more than made up for, according to a new Foundation study, City Income Taxes. If cities continue to impose 1960, it is estimated New Ymik an income tax at the same rate it Collection$ from iididual as characterized the first six yearzand cot-o = ration incom h via of the 1960's, by 1975 well over ma $420 million, half the large-city population (of Th reanlt ion the U.S.) will be subject to a city 'ie Foundation points t income tax, says tie new 47 that the pottion o1' tbt- Lage 6ii. page study. poptlation stitjtct to a city is,. Today, says the Foundation, cone tax has ualy tlipl'd to il more titan 1l nillion Amerirans the last decade. live in te more thain 171) U.S. Large Increase Since 1960 big cities that inmpose vary. ing types of incoe taxes. And H owever, the major patt of 'countIess others who cotmtute tile iiceaste has taken [)face to these cities to work, pay a since 19ft), the sitily Says. lit tax on the incote they earn i 1950, for example, .6 million those cities. Pittsburgh, for ex- ptersons, or about II iercent (if ample, levies a $10 occupational the large city p oplatin, wete tax on everyone eiplotyed there, subject to tile ley, an iteleas' regardless of residcnce. of about 2.6t millin itulislials, Tir study shows that over the or percentage pointis, sinc last decade the city inctme tax 1939. ill( in the seen %eats has rovhded fairly substantial sicer 1960, tihe populatit c.%- stnts which represent a con- ered by such taxes inrteacid by siderabh pars of the taxes col- 12 ndmilon itidisiditals atid hv 25 lccted in cities rislng a persmal percentage points. income levy, in soie cases Iit to The study aiso show.s that 71 percent. while cily inente tax rtllctlons. Most recently-available figures nationwide, are not large rout- show, says the Foundatioti, that hated hith the prperty lasx. total income taxes collected in all those majr cities siils do ttre the major cities rose from $120 these leties got from 20 to 71 million, (or 4 percent if all percent of revenue ftom them. taxes) in 1956, to $293 million, In general, says the Fotunda. (5.6 percent) in 1966. The $293 tto, ter ca italtnpetiiv taxe million, points rnt the study, are lower in major citie'itpos. comes to about 9 percent of the itg an income tax thalt in those property taxes collected that non-incotne tax cities of ctis. same -year (1966) by all the parable size. The fact that in large cities, all int one case. per capita prop. Bunt, adds the Foundation, the erty taxes and her rapita total $293 million figure skips the fact taxes have risen in the last tie- thit, since 1966, New York, Bal- ade by smaller percentages in in- tirnaore and Cleveland have in- cote tax cities, suggests that the troduced income taxes. income tax has not been so ilch In New York City alone, col- a supplemental reventie source lections from the tax in fiscal as a substititte for existing tax's, 1967, the first year it was levied, 'taking some of tite pressure off totaled $395 million. In fiscal tie property tax in particular. 000 Office of Economic Oppor- tunity grant to the University of ZI Wisconsin, 800 families, begin- e ning next month, will get nega. 0 live income tax payments, aver- % aging $1,200 apiece. These pay- - mnits, like a guaranteed annual ...' income, would make sip, sup. 9 posedly, tie difference between 4 what the f.unily bread winner earned and $3,000, plus, consid- to Swn cnoinries on the saute day. ered to be te threshold of the Te trip resulted,fie said, in nier- poverty lIne. The paymettts lapping collections of fyen, rupeis, are designed to encourage bread drachias, lira, rsctdrros, marks winners o find jobs, or better and kroner. And 2i1/at else it n,'v paying jobs. As their earned in- on the balance of paynetsr! come increased, tie guaran- # * as 41 teed payments would decrease. GONE. The General Accinnt- * * * ing Office made a surey of how TRAVEL. House of Repre- Office of Economic Opportunity sentatives approval for members funds were spent in ott,' Ken. of two committees So tavel tucky county and found: $295,. abroad twas ;ranted recently- 000 of tite $1.1 million expended with the proviso /hat there be no for the country's coinniunity ac. collecting for rmore thtan one tion program %sas in the natite day's expence a day. Congress- of direct benefits to the poor. janaf travels es are limited by law Travel costs of communiy coin- to expense money of $50 per day cii etloyees frot 1961 tlioigh in She currency of the country 1966, said GAO, aineittisrd to hey arc viling, but, according more tianS $97,000, alhost one- to Rep. Gross (Iowa), some third of the aoutnt of fuinds that members in 1966 collected $100 supposedly went directly to th a day more than once by going poor.

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