The Beer Tax and the Sales Tax

November 23, 1932

Report Outline
The Defocot, New Economics and New Taxes
The Federal Budget and the Need of New Revenue
The Movement for a Federal Tax on Beer
The Sales Tax in the 72nd Congress
Sales Tax Legislation in the States in 1932
Special Focus

The Defocot, New Economics and New Taxes

Volstead Act Modification and Possible Hoover Veto

When Congress convenes on December 5, 1932, the current deficit in federal finances will approximate three-quarters of a billion dollars, with the prospect of considerably exceeding $1,000,000,000 by the end of the fiscal year on June 30, 1933, unless new taxes are promptly imposed. There is, in any event, scant possibility that the budget can be balanced for the present fiscal year. A White House statement of November 19, 1932, announced that reductions in appropriations of about $700,000,000 would be recommended in the budget for the fiscal year 1934, which will be presented to Congress at the opening of the next session. While it was inferred that imposition of new taxes might thus be averted, strong doubt remains as to whether such action can be avoided, even if Congress should accept all of the economy measures to be advocated by the administration.

Failure of the new and increased taxes imposed by Congress at its last session and of the economy steps then taken to achieve the objective of a balanced budget has aroused widespread discussion of possible new sources of federal revenue. Substitution of a general manufacturers' sales tax for most of the special excise or “nuisance” taxes now in effect and modification of the Volstead act to permit the sale and taxing of beer are now regarded as virtually the only means of producing whatever additional revenue may be necessary. Whether one or both of these measures will be needed to balance the budget now seems to depend on the extent to which Congress will be willing to go in cutting federal expenditures.

Balancing the Budget by Taxes on Beer or Sales

The movement to modify the federal prohibition enforcement act and replenish government revenues with the proceeds of a beer tax, pushed without success at the last session of Congress, was given strong impetus by the sweeping Democratic victories at the polls on November 8. The 1932 Democratic platform pledged members of the party to immediate modification of the Volstead act. In the present Congress the Democrats already control the House and are in a position to control the Senate with the aid of a few Progressive votes. Various Democratic leaders have been joined by wet Republican members of Congress in asserting their intention to press for action on beer legislation at the short session. The success of such a move is threatened, however, by reports that President Hoover would veto a beer bill if it were presented for his signature. Although enough votes might, be mustered in the House to override a veto, the requisite number is believed to be lacking in the Senate.

ISSUE TRACKER for Related Reports
Taxation
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Jan. 16, 1998  IRS Reform
Mar. 22, 1996  Tax Reform
Apr. 06, 1990  How Fair Is the Nation's Tax Burden?
Aug. 28, 1987  Taxing Business Services
Oct. 17, 1986  Tax Reform In The States
Sep. 28, 1984  Tax Debate: 1984 Election and Beyond
Mar. 19, 1982  Tax-Exemption Controversy
May 19, 1978  Property Tax Relief
Apr. 07, 1978  Tax Shelters and Reform
Feb. 10, 1971  Property Tax Reform
Mar. 26, 1969  Tax Reform Pressures
Mar. 24, 1965  Excise Tax Cuts and the Economy
Feb. 15, 1961  Flexible Taxation
Apr. 02, 1959  State Tax Problems
Apr. 23, 1958  Tax Reduction, 1958
Aug. 14, 1957  Fast Tax Write-Offs
Apr. 10, 1957  Federal Payments in Lieu of Taxes
Sep. 12, 1956  Corporation Profits and Taxes in Prosperity
Mar. 16, 1954  Shares in Tax Relief
Nov. 21, 1953  Revision of Excise Taxes
Mar. 19, 1953  Federal-State Tax Relations
Oct. 01, 1952  European Taxes and Tax Evasion
Nov. 03, 1950  Excess Profits Tax
Feb. 01, 1950  Tax Loopholes
Jun. 04, 1949  Excise Taxes
Oct. 27, 1948  Postwar Sales Taxes
Aug. 29, 1947  Taxation of Family Income
Apr. 09, 1947  Income Tax Relief
Jan. 11, 1946  Taxation of Cooperatives
Oct. 16, 1945  Federal Taxes on Business
May 08, 1944  Postwar Taxes
Sep. 20, 1943  Sales Taxes
Dec. 05, 1941  New Taxes for Defense
Apr. 05, 1941  Taxation for National Defense
Feb. 28, 1941  Taxation of Alcoholic Beverages
Jan. 11, 1941  Exemptions from Taxation
Dec. 04, 1940  Federal Taxes and Defense Financing
Feb. 01, 1940  Sharing of Tax Revenues
Feb. 02, 1939  Turnover Taxes in the States
Nov. 05, 1937  Broadening of the Income-Tax Base
Jun. 17, 1937  Exemptions from Income Taxation
Apr. 05, 1937  Coordination of Federal and State Tax Systems
Dec. 19, 1936  Revision of Federal Tax on Capital Gains
Nov. 02, 1936  State Taxation of Natural Resources
May 26, 1936  Assessment of Property for Taxation
Apr. 17, 1936  Federal Taxes on Consumption
Mar. 19, 1936  Taxation of Undistributed Corporate Profits
Dec. 17, 1935  Reduction of Tax Burdens on Real Estate
Oct. 21, 1935  Tax Delinquency in the United States
May 21, 1935  Comparative Tax Burdens in America and Britain
Feb. 01, 1935  Federal Taxation of Corporations
Nov. 27, 1934  Elimination of Conflicts in Taxation
Jul. 25, 1933  Taxation of Excess Profits
Jan. 25, 1933  Tax Burdens and Tax-Free Securities
Nov. 23, 1932  The Beer Tax and the Sales Tax
Dec. 19, 1931  Sales Taxes: Federal, State, and Foreign
Sep. 18, 1931  Death Taxes and the Concentration of Wealth
Mar. 18, 1931  Federal Taxation of Large Incomes
Jan. 10, 1931  Taxation of Capital Gains
Nov. 09, 1929  Federal Tax Reduction-1930
Aug. 08, 1927  Federal Tax Reduction—1928
Sep. 27, 1926  Tax Reduction and the Public Debt
Jan. 16, 1926  Taxation of Estates and Inheritances
Nov. 07, 1925  Federal Taxation of Small Incomes
Nov. 28, 1924  Social, Fiscal and Legal Aspects of the Inheritance Tax
Apr. 07, 1924  Causes and Effects of the Tax Return Blockade
Dec. 12, 1923  Tax Exempt Securities
Dec. 10, 1923  Taxation
BROWSE RELATED TOPICS:
Prohibition
Sales Tax