The 1978 midyear review of the economy: hearings before the Joint Economic Committee, Congress of the United States, Ninety-fifth Congress, second session, Parts 1-3U.S. Government Printing Office, 1978 - United States |
Other editions - View all
Common terms and phrases
adjusted analysis billion Box-Jenkins budget capital formation capital gains tax changes consumer consumption corporate stock corporate tax cost debt deficit demand depreciation econometric economists effect of inflation equation equity estimates expansion expected inflation Federal Reserve Feldstein and Lawrence finance fiscal forecast funds government spending gross growth higher impact incentives income tax increase inflation rate inflationary investment tax credit investors Kemp-Roth tax cut labor LAFFER Lawrence Summers Martin Feldstein ment Michael Grossman MILLER monetary policy MPIR nomic nominal capital gains nominal gain nominal interest rate output percent period private saving problem productivity Proposition 13 rate of inflation rate of return ratio real capital gains real gains recession reduce result revenue rise Roth-Kemp bill saving rate SCHMIEDESKAMP sector Senator BENTSEN Senator PROXMIRE Senator ROTH Social Security substantial supply tax cut tax liability tax reduction taxpayers tion unemployment variable wage yield
Popular passages
Page 19 - Only when we have removed the heavy drag our fiscal system now exerts on personal and business purchasing power and on the financial incentives for greater risk-taking and personal effort can we expect to restore the high levels of employment and high rate of growth that we took for granted in the first decade after the war.
Page 24 - ... the incentives for creative investment, and to remove tax-induced distortions in resource flow. Reduction of top individual income tax rates from 91 percent to 65 percent is a central part of this balanced program. Fourth, apart from direct measures to encourage investment, the tax program will go to the heart of the main deterrent to investment today, namely, inadequate markets. Once the sovereign incentive of high and rising sales is restored, and the businessman is convinced that today's new...
Page 23 - ... improvement. Today, however, we not only have unused manpower and idle plant capacity ; new additions to the labor force and to plant capacity are constantly enlarging our productive potential. We have an economy fully able and ready to respond to the stimulus of tax reduction. Our need today, then, is — to provide markets to bring back into production underutilized plant and equipment; — to provide incentives to invest, in the form both of wider markets and larger profits — investment...
Page 24 - As a first step, we have already provided important new tax incentives for productive investment. Last year the Congress enacted a 7-percent tax credit for business expenditures on major kinds of equipment. And the Treasury, at my direction, revised its depreciation rules to reflect today's conditions. Together, these measures are saving business over $2 billion a year in taxes and significantly increasing the net rate of return on capital investments. The second step in my program to lift investment...
Page 22 - ... recession. A planned cash surplus of $1.8 billion for the current fiscal year is turning into a cash deficit of $8.3 billion, largely as the result of economic slack. If we were to slide into recession through failure to act on taxes, the cash deficit for next year would be larger without the tax redction than the estimated deficit with tax reduction.
Page 122 - Utility produced in this way is not purchased with income subject to taxation. Therefore, the amount of household-owned capital and labor supplied in the market will be influenced by marginal tax rates.
Page 24 - ... billion of revenue loss by selected structural changes in the income tax; most powerfully, in time, by the accelerated growth of taxable income and tax receipts as the economy expands in response to the stimulus of the tax program. Impact on the Debt Given the deficit now in prospect, action to raise the existing legal limit on the public debt will be required. The ability of the Nation to service the Federal debt rests on the income of its citizens whose taxes must pay the interest. Total Federal...
Page 22 - ... would fall and leave the government budget still in deficit. The attempt would thus be self-defeating. So until we restore full prosperity and the budget-balancing revenues it generates, our practical choice is not between deficit and surplus but between two kinds of deficits: between deficits born of waste and weakness and deficits incurred as we build our future strength. If an individual spends frivolously beyond his means today and borrows beyond his prospects for earning tomorrow, this is...
Page 121 - At that point, additional leisure becomes a free good, because nothing has to be sacrificed in order to acquire it. We often hear that a person works the first five months of the year for the government, and then starts working for himself. But that is not the way it goes. The first part of the year, he works for himself; he only begins working for the government when his income reaches taxable levels. The more he earns, the more he works for the government, until rising marginal rates discourage...
Page 14 - ... billion, the Kemp-Roth advocates are misreading the "verdict of history" in two important respects: . Contrary to their assertion that the Kennedy-Johnson tax cut achieved its economic stimulus and consequent revenue flows "by increasing aggregate supply, by increasing the reward to work and This 1s a slightly revised version of the original statement incorporating some editorial changes and footnotes and dropping an appendix containing lengthier quotations from President Kennedy's 1963 Economic...