ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, October 31, 1996 TAG: 9610310015
SECTION: EDITORIAL PAGE: A11 EDITION: METRO
COLUMN: RAY L. GARLAND
SOURCE: RAY L. GARLAND
AWAITING the result of our great national ballot, let's pursue what Henry James called the "fatal futility" of fact the candidates so wisely avoided.
Invited to harangue a local civic club, I turned the tables by coming armed with a questionnaire and dragooned them into supplying a totally unscientific sample of opinion - not on candidates and issues, but on what might be called basic facts of government. Taken as a group, they scored about 25 percent correct. Why not test yourself?
The questions:
1. What is the current national debt - $900 billion, $1 trillion, $5 trillion or $10 trillion?
2. What percent of all personal income in the country is claimed in taxes at all levels of government - 20 percent, 32 percent, 42 percent or 49 percent?
3. What is the maximum federal and state tax levied on income - 25 percent, 35 percent, 42 percent or 50 percent?
4. What would be a "fair" maximum tax burden in this country - 25 percent, 30 percent, 40 percent or 50 percent?
5. On wages up to $62,700, what tax do workers and employers pay to support Social Security and Medicare - 3 percent, 7 percent, 10 percent or 15 percent?
6. How many people now receive Social Security benefits - 20 million, 30 million, 38 million or 43 million?
7. What is the maximum tax that can be levied on corporate profits in this country - 25 percent, 35 percent, 50 percent or 70 percent?
8. What is the average annual cost of educating a pupil in the Virginia public schools - $2,500, $4,000, $6,000 or $7,500?
9. On average, what percent of all personal income is claimed by state and local taxes in Virginia - 5 percent, 8 percent, 11 percent or 15 percent?
10. What is the current annual budget of the state of Virginia - $3 billion, $7 billion, $12 billion or $18 billion?
11. Since 1970, the population of the country has grown about 30 percent. What has been the growth in federal spending in the same period - 200 percent, 400 percent, 800 percent or 1,000 percent?
12. What is the fastest-growing item in the federal budget - welfare payments, Medicare, education or the earned-income tax credit?
The answers:
1. The existing national debt is just over $5 trillion, the answer chosen by more than half in my group. That does not include obligations guaranteed by the government, but most of that is secure. Nor does it include future, unfunded liabilities for Social Security, etc. - a figure far higher than the debt.
2. All taxes in this country equate to about 32 percent of personal income. But counting the federal deficit, actual spending has run higher at about 37 percent. The good news is that the number has remained fairly constant for 20 years, irrespective of tax rates. But the bulk of my sample took the pessimistic view it was still higher.
3. The current maximum federal and state tax levied on income is 51.6 percent. Almost three-fourths of my sample chose a lower figure. Based on 1993 data, that would apply only in North Dakota, where the maximum federal rate of 39.6 percent would join a maximum state rate of 12 percent. Among large states, California was highest with a maximum combined rate of 50.6 percent. The Virginia maximum is 45.35 percent. The actual tax take would be slightly less because state taxes are deductible in whole or in part on the federal return.
4. The question of a "fair" maximum tax on income was, of course, subjective. But more than three-fourths of my group chose 20 percent or 25 percent and none chose 40 percent. In high-tax locales, when all taxes are taken together, some would bear a total tax burden exceeding 50 percent.
5. On wages up to $62,700, a Social Security/Medicare tax of 15.3 percent is paid - half by employers, half by employees. While the Social Security tax stops at $62,700, the Medicare tax of 2.9 percent applies to all salaried income.
6. Just over 43 million people now receive Social Security benefits. In 24 years, that figure is reliably estimated at 68 million. Assuming an average inflation of 3 percent a year and no change in the cost-of-living adjustment, Social Security outlays would then be about $1 trillion. The most recent report of Medicare trustees predicts that outlays for hospital care will exceed receipts by just over $1 trillion in the five years beginning in 2001.
7. Only one person in my group gave the correct answer of 70 percent as the maximum tax that could be levied on corporate profits. Here's how. Take $100 in corporate profits and deduct the federal corporate income tax of 35 percent and the maximum state rate of 12 percent. That leaves $57, not $53, because state tax payments are a deductible expense. Now, assume the $57 is declared as a dividend to an affluent taxpayer in North Dakota: About $30 will be left from the original $100. The Virginia corporate rate is 6 percent
8. The average annual cost of educating a pupil in the Virginia public schools now exceeds $7,500. If you said lower, don't worry; almost two-thirds of my sample did so, too.
9. All local and state taxes in Virginia claim less than 11 percent of total personal income.
10. The current state budget is close to $18 billion.
11. Since 1970, federal outlays have risen 800 percent, a figure considerably higher than population growth plus inflation.
12. The fastest-growing item is the earned-income tax credit, which no one in my group guessed. This year, the federal government will pay about $25 billion to some 9 million households. The IRS is taking steps to combat fraud in the program. What else is new?
Ray L. Garland is a Roanoke Times columnist.
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