Federal Taxation of Corporations

February 1, 1935

Report Outline
The Budget, the Bonus, and New Federal Taxes
Corporation Profits as Source of Added Revenue
Federal Taxation of Corporate Income, 1909–1934
State and Foreign Graduated Corporation Taxes

The Budget, the Bonus, and New Federal Taxes

In His Message to Congress transmitting the budget for the fiscal year 1936, President Roosevelt recommended continuance of those temporary internal-revenue taxes scheduled to terminate on June 30 and July 31, 1935, and continuance of the present rates of certain other taxes which would be reduced on June 30, 1935, under the provisions of existing law. Although even on this basis a net deficit of nearly $4,000.000.000 was forecast, the President said he did not “consider it advisable at this time to propose any new or additional taxes for the fiscal year 1936.” If legislation should be finally enacted requiring a substantial outlay of federal funds for immediate payment of the soldiers bonus, however, it is believed that the administration would recommend new or higher taxes to prevent, so far as possible, a further increase in the deficit. In the event of such a development, it is considered not unlikely that corporation profits would be levied upon for a large share of the necessary additional revenue.

Taxation of Public Utility Holding Companies

The President informed Congress in his annual message that he would consult with it on measures for “the restoration of sound conditions in the public utilities field through abolition of the evil features of holding companies.” While the general question of tax legislation was being held in abeyance by congressional leaders pending the outcome of the bonus fight, the Chief Executive conferred on January 21 with Secretary of the Treasury Morgenthau and other officials on legislative proposals for regulation of utility holding companies. It was indicated that plans were considered for subjecting them to heavy taxation by removing, at least in part, the exemption they now enjoy on dividends received from subsidiaries.

Under an amendment to the Revenue Act of 1934, offered by Senator Borah (R., Ida.) at the last session of Congress and defeated by the close vote of 33 to 39, all holding companies would have been penalized by a provision that no corporation should be permitted to deduct from its gross income dividends received from another corporation. It has become known that Senator Wheeler (D., Mont.), chairman of the Interstate Commerce Committee, is now preparing a bill that would strike at bigness in corporate business in general by levying a graduated excise tax on corporations, based on valuation. Such a tax would presumably be an extension of the present flat tax on capital stock.

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:
Commercial Law
Federal Taxes