Tax Burdens and Tax-Free Securities

January 25, 1933

Report Outline
Prospect of Tax Increases by the New Congress
The Problem of Tax-Exempt Securities
Failure of Amendment to Abolish Tax-Free Bonds
Suggested Methods of Reaching Tax-Free Income
Special Focus

Prospect of Tax Increases by the New Congress

Hoover's Sales Tax Proposal; Democratic Income Tax Proposals

The Nature and Scope of any new tax legislation undertaken by Congress in special session during the early months of the Roosevelt administration will be strongly influenced by the yield from the increased income taxes imposed by the Revenue Act of 1932. First returns and first income tax payments under this act, covering incomes received during the calendar year 1932, will be due on March 15 next. If the yield from the income taxes proves as disappointing as that from most of the new excise tax now in effect, further tax levies by the new Congress will be unavoidable. They probably will be unavoidable in any case. Campaign promises of economies sufficient to balance the budget without new taxes, other than a tax on beer, are likely to be found impossible of fulfillment.

Secretary of the Treasury Mills, in a radio address on January 16, 1933, asserted that half a billion dollars of additional revenue would be needed to balance the budget for the next fiscal year, even if current expenditures were reduced by half a billion. President Hoover, in a special message to Congress the next day, estimated the deficit for the next fiscal year at $500,000,000 to $700,000,000, exclusive of sinking fund charges. Both urged immediate adoption of a general manufacturers sales tax to make revenues match expenditure during the first fiscal year of the Roosevelt administration.

Democratic Income Tax Proposals

When a proposal of this nature was advanced by Democratic leaders in December, it was promptly disavowed by the President-elect and was there-upon abandoned by his supporters at Washington. In a conference with Democratic leaders at New York, January 5, 1933, a plan for broadening the base of the individual income tax by a further lowering of exemptions, and for increasing the yield by raising the normal rates to 6 and 12 per cent, the highest rates imposed during the war, was laid before Mr. Roosevelt. This plan, if not endorsed, at least was not disapproved by the President-elect. In response to public criticism of this plan, Senator Harrison (D., Miss.), prospective chairman of the Senate Finance Committee, indicated that lowering of exemptions and increases in normal rates were not the only changes in the income tax contemplated by the new majority.

ISSUE TRACKER for Related Reports
Feb. 07, 2020  Hidden Money
Jun. 28, 2013  Internet Shopping
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
Commercial Law
Tax Reform