Word: surtaxable
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Nixon, of course, can revise the proposed budget. Though he and President Johnson conferred by telephone for 40 minutes shortly before Johnson gave his State of the Union speech, Nixon is only tentatively committed to extending the 10% income surtax for another year. Because Nixon is pledged to halt inflation, however, he will find it doubly difficult to end the surtax and thus erase the deflationary surplus Johnson hopes to create. Johnson asked an overall 13% increase in social security benefits; in the campaign, Nixon proposed to tie social security payments to a cost-of-living index so that benefits...
...even after this immense military mortgage is taken into account, the financial bind should begin to ease in 1971. If Nixon chooses to keep taxes at present levels-without the surtax-he will enjoy the benefit of "a fiscal dividend." This dividend is created by the automatic rise in federal revenues that accompanies the economy's growth; automatic, that is, so long as the economy does grow, for recessions have not yet become unconstitutional. If the gross national product continues to advance at a rate of an average 6-7% annually, tax revenues will increase faster than federal expenses...
When Congress finally got around to enacting the surtax at midyear, much of its effect was washed away by another big factor. While taxes went up, wages went up much faster. During the year's first nine months, about 3,400,000 unionized workers won pay raises averaging 7.5% annually, the largest gain since the Labor Department started keeping track 14 years ago. For the year as a whole, wages and benefits rose about 7%, while productivity increased only 3.2%. The result was that so-called unit labor costs jumped 3.8% -and the consumer...
...money supply expanded at an annual rate of 8% during the year's first half. Even after the midyear tax increase, the Fed's governors continued to ease credit because, like most other experts, they misjudged how quickly the surtax would begin to brake the economy. In the last three months, the Fed has changed course, holding the increase in the money supply to a moderately constrictive rate of 3.8% a year...
...taxpayer will be hit with an increase in Social Security taxes; the maximum payment, for people earning $7,800 a year or more, will go up from $290 to $374. On April 15, millions of Americans will have to pay out a lot more to cover the 10% surtax on their earnings from April through June 1968, when the surtax was not withheld from paychecks. In addition, with the slowdown in Government spending and the rise in tax revenues, the federal budget may even show a small surplus in the current fiscal year ending June...