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Exemptions from Taxation

January 11, 1941

Report Outline
Current Efforts to Curtail Exemptions
Intergovernmental Tax Exemptions
Tax Exemptions as Form of Subsidy
Subsistence Tax Exemptions

Current Efforts to Curtail Exemptions

Administration Proposal to Tax Public Securities

Steadily mounting demands upon public treasuries, and the threat of heavy tax increases for the future, have led American legislatures in the last few years to display a stronger resistance to pressure from private and quasi-public interests for exemptions from taxation. At the same time, legislative bodies have shown a disposition to reexamine exemptions previously granted, in order to correct inequities in the tax system and to widen the tax base. As Frederick L. Bird of Dun and Bradstreet observes: “Public budgetary requirements have become too urgent and expensive to permit the extension of tax exemption favors in the casual manner so often characteristic of the past.”

With approval of the Public Salary Tax Act in 1939, Congress extended the application of the federal income tax to employees of state and local governments and granted the states and localities permission to tax the incomes of federal employees. Legislation to remove the tax exemption privilege from interest paid on future issues of federal securities, and to permit federal taxation of income from state and local securities, will be sought by the administration at the present session.

Two measures to deal with the problem of tax-exempt securities have already been offered in the 77th Congress. A joint resolution by Rep. Kean (R., N. J.) provides for submission of a constitutional amendment to authorize reciprocal taxation of public securities; a bill by Rep. Tenerowicz (D., Mich.) proposes to authorize such taxation by legislative fiat. The Tenerowicz bill would permit taxation of income from all public securities issued after September 1, 1939. The Roosevelt administration has opposed retroactive taxation, however, and Secretary of the Treasury Morgenthau disclosed, January 6, that the Treasury was preparing its own bill on the subject.

ISSUE TRACKER for Related Reports
Taxation
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Feb. 15, 1961  Flexible Taxation
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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:
Tax Exemption
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