Sales Taxes: Federal, State, and Foreign

December 19, 1931

Report Outline
Administration Proposal of New Taxes to Meet Deficit
General Sales Taxes in Theory and Practice
Use of Sales Taxes by the Federal Government
Use of Sales Taxes by the State Governments
General Sales Taxes in Foreign Countries
Special Focus

Administration Proposal of New Taxes to Meet Deficit

New or increased sales taxes on automobiles, radios, telephone and telegraph messages, theater tickets, and cigarettes, together with several other miscellaneous levies of the same nature, were recommended by the Treasury Department, December 9, 1931, as part of a program to provide the government with enough additional revenue to balance the federal budget by the end of the fiscal year 1934. The Democrats, who have an outright majority in the House of Representatives and enough members in the Senate to control that body in combination with the Progressives, failed to express full agreement with the new Mellon plan. Their policy committees in Senate and House took the question under advisement and will endeavor to formulate a program upon which the Democratic members of Congress can present a united front. Hearings before the House Ways and Means Committee on the emergency revenue bill are expected to begin when Congress reconvenes after the Christmas recess.

Judging from Democratic criticism of the Treasury proposals, members of that party are likely to demand that the major part of the burden of new taxation be placed upon the wealthy. To this end, they may recommend heavier levies on large incomes and estates than those proposed by Mellon, insist upon enactment of a gift tax to check estate tax evasion, oppose lowering of the personal exemptions of the income tax, and favor restriction of new sales taxation to a narrower range than that suggested by the administration. Such a program would probably produce less revenue than the Mellon plan, but the Democrats are inclined to favor liberal borrowing in the existing emergency, as well as relaxation of the provisions of law requiring specified payments into the sinking fund.

Position of Treasury on a General Sales Tax

Senator Reed (R., Pa.) last September proposed a permanent general sales tax on all articles and commodities other than the prime necessities. He asserted that approximately half the annual federal revenues could be raised by such a tax without inflicting hardship upon any element of the population. Support for the principle was indicated by several members of the Senate, but the opinion was also expressed that congressional approval for a general sales tax could not be won at this time. It was recalled that the Senate in 1921 rejected several general sales tax proposals sponsored by Senator Smoot (R., Utah), now chairman of the Senate Finance Committee. Votes for the Smoot bills came entirely from Republican senators. The Democrats were solidly opposed. Then, as now, they, with the Progressives, condemned the general sales tax as laying an unjust burden upon the poorer classes while relieving the wealthy of taxes they were well able to pay.

ISSUE TRACKER for Related Reports
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Aug. 28, 1987  Taxing Business Services
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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
Sales Tax