Broadening of the Income-Tax Base

November 5, 1937

Report Outline
Tax Revision and the Budget Situation
Personal Exemptions and Income-Tax Liability
Revenue Stability and Tax Consciousness
Collection of Income-Tax at the Source
Special Focus

Tax Revision and the Budget Situation

A subcommittee of the House Ways and Means Committee under the chairmanship of Rep. Vinson (D., Ky.) met in Washington this week to begin preparation of a general tax bill to be submitted to Congress at its regular session next winter. The proposed measure, based upon studies conducted independently by the subcommittee and upon Treasury recommendations resulting from an exhaustive survey of the federal tax structure, will have as its principal objective, not increased taxes, but the removal of inequities in the present revenue laws. While interest will doubtless center in revision of the undistributed-profits tax and of the provisions dealing with capital gains and losses, proposals will be made, in the Senate if not in the House, to broaden the base of the income tax. Senator La Follette (P., Wis.) said in mid-October he would resume the fight he has waged for several sessions to obtain a lowering of the personal exemptions as well as a raising of surtax rates in the middle brackets.

In view of the fact that all members of the House and one-third of the members of the Senate will be obliged to stand for re-election next year, it may be seriously questioned whether a measure designed to subject at least 1,500,000 additional persons to the income tax has any chance of passage at the coming session. At the same time, the picture may be changed if the budget situation should make it imperative to increase federal revenues, Last January the President estimated that the government would end the fiscal year 1938 with a surplus of $37,000,000. Revised estimates in April, however, indicated a deficit of $418,000,000, and this figure was raised to $695,000,000 in estimates published October 18. If revenues should be seriously affected by the current downward trend of business activity and by losses from the recent break in stock prices, the estimate of the deficit for the present fiscal year may have to be again revised upward. Such an eventuality, moreover, might diminish the prospects for a balanced budget in the fiscal year 1939, assurance of which was held out by President Roosevelt in a speech at the Bonneville Dam on September 28.

Revenue Needs and Advocacy of Broader Tax Base

While the government's immediate fiscal problem is to balance the budget, that task will no sooner be accomplished than thought must be given to reducing the huge public debt that has piled up in nearly a decade of deficit years. The difficulty of making progress in that direction will be all the greater if federal expenditures are to continue at or close to their present high levels. In urging a broadening of the income-tax base and an increase in surtax rates, Senator La Follette has voiced his conviction that government expenditures must not only be continued on the current scale but increased to sustain recovery. However that may be, federal fiscal demands are likely to be so pressing for a number of years to come as to force consideration eventually of means of increasing the productivity of the income tax.

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
Income Tax