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25 Monthly Tax Features 1 (1981)

handle is hein.tera/taxfeaturs0025 and id is 1 raw text is: MONTHLY TAX FEATURES Volume 25, Number 1, January 1981 - ToxIundationlnc. 1875 Connecticut Ave., N.W. El Washington, D.C. 20009 El 202-328-4500 [ Budget Process Is StillBeing Tested TF Analysis Asserts The jury is not yet in on the 1974 Congressional Budget Act, according to an analysis of the Act just pub- lished by the Tax Foundation. The Congressional Budget Process at the Crossroads, written by. Tax Foun- dation's budget specialist Maynard H. Waterfield, examines the oper- ations of the agencies established by the 1974 Act-the Budget Commit- tees and the Congressional Budget Office--and explores the strengths and weaknesses of the key elements of the budget process-the timetable, the budget resolutions, and the rec- onciliation process. Such an analysis is cogent, Water- field states, because the confluence of record high inflation rates, public and political pressures for budget balance, and an economic downturn which may prove much more severe than predicted, is likely, over the coming months, not only to test the budget process severely but perhaps to determine whether or not it can survive as a viable'budget tool for the Congress. The Timetable The timetable as a means of com- pleting budget-related activities on schedule has not fared well, in Wa- terfield's eyes. The timetable for budgetary actions,: he notes, has become almost more honored in the (Continued on page 3) Tax Index Resumes Upward Climb After Slight Dip in 2nd Quarter The Tax Index appears to have re- sumed its almost unmitigated se- quence of advances, following a slight setback in the second quarter of 1980. Based on data which has just become available, Tax Foundation researchers calculate that the Tax In- dex in the third quarter of 1980 rose at an annual rate of almost 16 percent over the previous quarter. In the second quarter of last year, the Index had declined at a yearly rate of about 5 percent, for its first quarterly slide since the 1973-75 recession. The second quarter's dip in the overall Index was a direct re- sult of a shrinkage in corporate prof- its and the associated drop in tax ac- cruals for both Uncle Sam and the state treasuries (see Monthly Tax Features, October 1980). The Tax Index in third quarter, 1980, stood at 367.3 (1967 equals 100), up from 354.1 in the previous quarter. On a compounded annual rate basis, this was a hike of 15.8 per- cent for the quarter. At the same time, the annual rate of increase in nominal dollar gross national product was 10.8 percent, and in prices, 9.9 percent. Although all major types of taxes moved up in the third quarter, the biggest increase was in corporate profits taxes. Annual rates of change in the separate taxes for the quarter were: corporate profits taxes, up 45 (Continued on page 2) Taxes, GNP, and Prices Index Numbersa 1967 = 100 Year and quarter Tax Index GNP Indexb Price Index 1978 I..................... 279.1 252.6 186.1 II.................. 295.3 264.2 190.9 IIl..................... 302.8 271.2 194.2 IV ..................... 315.5 280.7 198.3 1979 I ..................... 322.3 287.8 202.8 II..................... 328.5 292.6 207.3 II ..................... 340.3 301.0 211.6 IV ..................... 351.7 308.5 215.9 1980 Id .....................359.6 316.6 220.8 id ... 354.1 316.6 226.5 IIIe ...................... 367.3 324.8 231.9 Quarterly, at seasonally adjusted annual rates. hGross national product in current dollars. rimplicit price deflator for gross national product. dRevised. ee,;;vnary. Source: U.S. Department of Commerce, Bureau of Economic Analysis; and Tax Foundation estimates and computations. ATTENTION EDITORS: Monthly Tax Features Is not copyrighted. Material may be reproduced freely. Please credit Tax Foundation.

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