Corporation income taxes.-Corporation income tax receipts are estimated at $40.1 billion in 1976 and $49.5 billion in 1977. Enacted and proposed tax law changes reduce these receipts by $2.7 billion in 1976 and $5.5 billion in 1977. In the absence of these changes, profits taxes would increase by $12.2 billion in 1977, reflecting the large increase in profits that is expected to accompany the economic recovery. Social insurance taxes and contributions.-Included in this category are social security and railroad retirement taxes, unemployment insurance taxes and deposits, Federal employee retirement contributions, and premium payments for supplementary medical insurance. Receipts from this source are expected to total $113.1 billion in 1977, up by $20.5 billion. from 1976. Proposed legislation, as described earlier, accounts for $5.4 billion of this increase in 1977 receipts. These receipt figures also reflect a statutory increase in the taxable earnings base under social security from $14,100 to $15,300 effective January 1, 1976, and an anticipated increase from $15,300 to $16,500 effective January 1, 1977, due to the operation of the automatic adjustment mechanism provided in current law. The increase in January 1977 will be determined by the increase in the average taxable wage from the first quarter of calendar year 1975 to the first quarter of calendar year 1976, with the amount of the increase rounded to the nearest multiple of $300. Excise taxes.-Excise taxes are levied on a variety of products, services, and activities. Receipts from these taxes in 1977 are estimated at $17.8 billion, which is $0.9 billion more than in 1976. Excise tax receipts in both 1976 and 1977 reflect the continued phasing out of the telephone excise tax. This tax rate was reduced from 7% to 6% on January 1, 1976, and will be reduced to 5% on January 1, 1977. Other receipts.-Estate and gift taxes, customs, and miscellaneous receipts are estimated to total $17.3 billion in 1977, an increase of $0.1 billion from 1976. The miscellaneous receipts estimate reflects elimination of the import fees on crude oil and petroleum products that were imposed by administrative action in 1975. Because of recent court action challenging the legality of the imposition of these import fees, all such fees collected after August 11, 1975, are being held in a deposit fund. The budget estimates assume that this litigation is resolved in the Government's favor and include the fees in 1976 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 rents, royalties, and the sale of Government products and property (such as timber and veterans life insurance). 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. The detail of proprietary receipts from the public is shown in table 13 of Part 8. ANALYSIS OF 1975 RECEIPTS This section explains the differences between actual receipts by major source for the last completed fiscal year and the original budget estimates for that year. The Congressional Budget Act of 1974 requires that this information be included in each budget beginning with the one for 1978. This kind of information was presented last year for 1974, and is presented again this year for 1975, to facilitate the transition to the new congressional budget process. As shown by the table below, receipts for 1975 were $14.0 billion lower than originally estimated in the budget for that year (submitted in February 1974), largely because legislated tax changes were different from those assumed in the budget for individual and corporation income taxes. Individual income taxes in 1975 were $6.6 billion lower than originally estimated. The major cause was the Tax Reduction Act of 1975, which reduced individual income tax receipts in 1975 by $9.4 billion. Partially offsetting this legislated reduction were increases amounting to about $3.0 billion. About $1.0 billion of this increase resulted from congressional inaction on tax reform and simplification proposals in the 1975 budget. Personal income in calendar year 1974 was about $20 billion higher than originally projected, accounting for the remaining $2.0 billion increase. Corporation income taxes were $7.4 billion below the original budget estimate. About $3.8 billion of this reduction reflects differences in tax law from what was proposed in the 1975 budget. The Tax Reduction Act of 1975 lowered corporation income tax receipts by $0.8 billion, and inaction on a proposed windfall profits tax on the sale of domestic crude oil lowered receipts by $3.0 billion. The remaining reduction of $3.6 billion is composed of a $2.0 billion increase in refunds and a $1.6 billion decrease in tax payments. This net $3.6 billion reduction was caused primarily by a lower effective tax rate than was originally assumed and was not affected greatly by changes in corporate profits. Corporate profits for calendar years 1973, 1974, and 1975 all affect fiscal year 1975 collections. Profits for 1973 and 1975 were below the original assumption while those for 1974 were above the original estimate; the effects of these differences were largely offsetting. Social insurance taxes and contributions were $0.8 billion higher than originally estimated, with almost all of the increase in higher unemployment tax receipts. These were largely due to increased State taxes deposited in the Treasury to finance unemployment benefits. Social security taxes and other contributions for social insurance were each within $0.1 billion of the original estimates. Excise taxes, estate and gift taxes, and customs duties were below the original estimates by $0.9 billion, $1.4 billion, and $0.1 billion, respectively. Miscellaneous receipts were $1.6 billion above the original estimate, largely because of higher deposits of earnings by the Federal Reserve System ($1.1 billion) and the increased import fees on petroleum and petroleum products in calendar year 1975 ($0.4 billion). |