A Special Summary and Forecast Of Federal and State Tax Developments
SLOWER ECONOMIC GROWTH will trim budget surpluses, analysts predict.</br></br>As economic storm clouds darken, economists are cutting budget-surplus estimates for next year. Bruce Steinberg of Merrill Lynch predicts the economy will grow only 1.5%, down from an estimated 3.5% this year. "Clearly, the budget surplus will be much smaller than advertised," he warns. Corporate tax receipts "are already beginning to fall off because of the weakness in corporate earnings." Slower job growth and the stock market's woes also are likely to weigh heavily on income-tax receipts.</br></br>James Glassman of Chase Securities, a unit of Chase Manhattan, predicts the economy will expand only about 1% or less over the next four quarters, with the federal budget surplus narrowing to $50 billion or less in fiscal 1999 from about $71 billion this year. Donald J. Boyd of the Center for the Study of the States, a unit of the Rockefeller Institute of Government in Albany, N.Y., adds: "There's no question the slowing economic environment will have adverse effects on state finances."</br></br>Next year, "we will see far fewer proposals for state-tax cuts than we have in recent years," Mr. Boyd predicts.</br></br>SELF-EMPLOYED WORKERS may deduct more of their health-insurance costs.