Special Report No. 28
The Clinton administration has released its fiscal year 1995 budget amid good news about the nation’s rebounding economy. The growing economy has led to substantial improvements in deficit projections compared to just one year ago. On outlays of $1,518 billion and receipts of $1,342 billion in fiscal year 1995, the FY’95 deficit is projected to he $176 billion. Last fall the administration had projected the FY’95 deficit would be $207 billion.
Even though the president’s budget does not make dramatic taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. or spending changes, significant growth can be seen in both receipts and outlays over the five-year budget plan. Federal outlays will grow as demands on entitlement programs—including Social Security, Medicare, and Medicaid—continue to expand. Federal receipts are projected to grow as tax revenue flows into the Treasury from stronger economic growth and higher tax rates enacted in last year’s budget.
In fact, per-capita federal taxes will rise from $4,824 in FY’94 to $5,146 in FY’99, in constant 1994 dollars. Per-capita individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. revenue, which grew a total of only 4.4 percent over the period FY’80 to FY’93, is projected to grow 9.9 percent over the five-year budget plan. Per-capita social insurance taxes, which take the form of payroll deductions and fund Social Security and Medicare, rise 7.1 percent in the five-year budget projections.Share