Reversing a Trend

In 1929, the U.S. Government took only 35-c- of the taxpayer's dollar, while 65-c- went to states and local governments. Then a quarter of a century of centralization, high spending and war shifted the balance. By 1953 the pie was cut 75-c- for the Federal Government, 25-c- for the states and local governments. In 1955 the trend is being reversed. The current estimate is 71-c- to 29-c-.

By cutting back and holding down federal taxes and expenditures, the Eisenhower Administration has sliced off a slightly smaller cut of the tax pie for the Federal Government. Last week, as state legislatures were completing their 1955 sessions, it was clear that the states are reaching out for a bigger and bigger slice. Said Chicago's Frank Bane, executive director of the Council of State Governments for the past 17 years: "In raising state taxes, there is a more extensive and more concerted drive this year --with more results. The increase this year will be almost twice as extensive and al most twice as much as the increase in any year of my recollection."

Refueling the Gas. The upward trend is noticeable all across the nation. Governors of twelve states proposed new taxes this year, and the governors of 29 called for increases in present levies. In New York, personal income taxes were in creased 11% by Democratic Governor Averell Harriman's administration. In Iowa, under Republican Governor Leo Hoegh, the legislature adopted a whole range of tax increases (in sales, use, in come and gasoline levies), adding up to an 8% boost. Nevada became the 32nd state to levy a general sales and use tax (2%); Washington pushed its state sales tax up to the highest in the U.S. (3.3%) ; Idaho decided to begin deducting state income tax from paychecks. Gasoline taxes, levied by all 48 states, are going up from an average of 5.6-c- a gallon to 5.9-c-. The total state tax take for fiscal 1956, assuming a continued strong economy, will soar well over $12 billion. That will represent an increase of more than 275% since 1945.

For years, pressure for higher state and local government expenditures has been building up, particularly in demands for schools, roads and mental hospitals.

Redistributing the Power. In expanding state income, sales and excise taxes to fill such needs, state governments have moved far beyond their traditional field of property taxes. In some states the trend has reached down to the local governments, with the result that the residents of some cities, e.g., St. Louis and Louisville, are now paying three in come taxes -- federal, state and local. The Eisenhower Administration has made fit ful starts, but has had no success, in an effort to draw clear lines between the tax fields that should be harvested by federal, state and local governments.

While increasing state and local taxes are hard on the taxpayer, the 1955 shift of emphasis tends to bring government closer to the governed. It is a fact that revenue and expenditure figures often measure the power of government. Throughout the growth of the New Deal, when new federal projects and jobs were pouring out of Washington, the power of the state and local governments dwindled while that of the federal bureaucracy grew. In 1955, along with their taxes and their expenditures, the relative power and importance of state and local govern ments are rising.

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