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EFFECT OF TAX PROPOSALS ON RECEIPTS IN COMPARISON TO EXTENSION OF
TEMPORARY TAX PROVISIONS 1
Income tax reductions and reforms:
Reduced tax rates and $240 credit.-
Subtotal-individual income taxes .
Corporation income taxes:
Subtotal-corporation income taxes..
Repeal of telephone excise tax..
-24.3 - 23.3 ADDENDUM Effect of tax proposals on receipts by source: Individual income taxes.
-23.9 -26.5 Corporation income taxes.
-6.4 -8.6 Social insurance taxes 4
-.6 .2 Excise taxes..
12.1 Other... 1 Excludes extension of the jobs tax credit. Unlike the other temporary provisions, the jobs tax credit is a short-term countercyclical provision.
2. This provision also applies to individuals and therefore directly reduces individual income taxes. This effect is included in the "other" line for individual income taxes.
3 This action can be accomplished under current law by administrative action. * Includes effect of accelerating State and local deposits of social security taxes, which can be accomplished by administrative action.
CHANGES IN BUDGET RECEIPTS
Budget receipts are estimated to rise by $43.5 billion in 1978, $39.2 billion in 1979, and $65.8 billion in 1980. The year-to-year changes can be divided between those due to growth in the tax base and those due to revisions in the tax structure. Under the tax rates and structure in effect on January 1, 1975, receipts would have risen by $46.8 billion in 1978, $51.6 billion in 1979, and $49.4 billion in 1980. Thus, the combined effect of enacted and proposed tax law changes, which is shown in the table on the following page, reduces the growth in receipts by $3.3 billion in 1978 and $12.4 billion in 1979. In 1980 these changes increase the growth in receipts by $16.4 billion.
Growth in receipts (in billions of dollars):
Administration budget proposals.---
1980 65.8 49.4
CHANGE IN BUDGET RECEIPTS
[In billions of dollars)
Receipts under tax rates and structure in effect Jan. 1,
1975. Administrative actions:
Increase in sugar import duties.---
foreign and domestic income...
Tax Reduction Act of 1975...
Tax Reduction and Simplification Act of 1977.---
$14,100 to $15,300 effective Jan. 1, 1976-------
$22, 900 to $25,900 effective Jan. 1, 1980. Social security tax rate increases: 1
11.7% to 12.1% effective Jan. 1, 1978..
12.1% to 12.26% effective Jan. 1, 1979. Social security employer tax on tips.Unemployment tax rate and base increases-
Increase in SMI (medicare) premium..
1 The effect of an increase in the taxable earnings base is calculated using the tax rate of the ceding year. The effect of a tax rate increase is calculated using the taxable earnings base for same year.
2 Excludes extension of the jobs tax credit. Unlike the other temporary provisions of the 1977 the jobs tax credit is a short-term countercyclical provision.
3 Includes the effect of accelerating State and local deposits of social security taxes, which be accomplished by administrative action.
RECEIPTS BY SOURCE Individual income taxes.- Individual income tax receipts are estimated at $178.8 billion in 1978, $190.1 billion in 1979, and $223.9 billion in 1980. The following table shows the effect of proposed tax aw changes on these estimates in billions of dollars.
*$50 million or less. | Excludes Payments to social security and welfare recipients, which are included in outla ys, i · Corporation income taxes.—Corporation income tax receipts are estimated at $58.9 billion in 1978, $62.5 billion in 1979, and $69.1 billion in 1980. The following table shows the effect of proposed tax law changes on these estimates in billions of dollars. 1
1979 1980 Corporation income taxes, current law.--
59.5 70.0 80.4 1 Extension of temporary provisions
Corporation income taxes, proposed..
* $50 million or less.
Social insurance taxes and contributions.—This category includes social security and railroad retirement taxes, unemployment insurance taxes and deposits, Federal employee retirement contribuions, and premium payments for supplementary medical insurance.
Receipts from this source are expected to be $124.1 billion in 1978, $141.9 billion in 1979, and $160.1 billion in 1980. These figures reflect increases in the social security tax rate and taxable earnings base that are scheduled under current law. The 1980 estimate also includes $1.1 billion from an administrative action to accelerate State and local eposits of social security taxes. These estimates also reflect the
Unemployment Compensation Amendments of 1976, which increased the Federal unemployment insurance tax rate (from 0.5% to 0.7%) effective January 1, 1977, and tax base (from $4,200 to $6,000) effective January 1, 1978. Proposed legislation would repeal the rate increase effective January 1, 1979. The estimates also anticipate higher State deposits of unemployment taxes (which are included in budget receipts) as States raise their rates to repay borrowings from the Federal Government and replenish their balances in the unemployment trust fund.
Excise taxes.—Excise taxes are levied on a variety of products, services, and activities. Receipts from these taxes are estimated at $20.2 billion in 1978, $25.5 billion in 1979, and $31.1 billion in 1980. Excise tax receipts in these years reflect the administration's energy tax proposals, as described earlier. These proposals increase excise tax receipts by $1.8 billion in 1978, $7.9 billion in 1979, and $13.4 billion in 1980. The excise tax estimates also reflect the proposed repeal of the telephone excise tax effective October 1, 1978.
Other budget receipts.-Estate and gift taxes, customs, and miscellaneous receipts (the largest of which are deposits of earnings by the Federal Reserve System) are estimated to total $18.3 billion in 1978, $19.7 billion in 1979 and $21.1 billion in 1980. The miscellaneous receipts estimates reflect proposed legislation discussed earlier.
Proprietary receipts.-In addition to budget receipts, the Government receives significant proprietary income from the public. This income is derived from various market-oriented activities—such as interest, rents, royalties, and the sale of Government property, products, and services. Since this income arises from business-type transactions rather than from taxation, it is treated as an offset to related outlays and budget authority rather than as budget receipts. Proprietary receipts from the public are shown in table 11 of Part 9.