Tax Shelters and Reform

April 7, 1978

Report Outline
Debate Over Reform Measures
Past National Tax Policies
Current Efforts at Reform
Special Focus

Debate Over Reform Measures

Complaints of Inequity in the Tax Law

As this year's April 17 deadline for filing income tax returns draws near, many taxpayers no doubt would agree with T.S. Eliot that “April is the cruelest month.” Though most Americans have come to accept the assertion that taxes are “what we must pay for civilized society,” complaints about the size of the tax bite are as old as the system itself. From its inception 65 years ago, it was the intent of federal income tax law to promote a fair distribution of the benefits and burdens of taxation. But belief in the equity of the law has been challenged repeatedly by those who contend that built-in advantages, or “loopholes,” allow some persons to avoid paying their fair share of taxes and others to get by without having to pay any tax at all.

A study released by the U.S. Treasury Department in January indicated that individuals with incomes of over $30,000—5 per cent of the total number of U.S. taxpayers—claimed nearly half of the $84 billion in special tax breaks during fiscal year 1977. Persons with annual incomes of over $50,000—1.4 per cent of the taxpayers—took advantage of 31 per cent of the special tax privileges. At the other end of the scale, those earning $10,000 or less — 52 per cent of the taxpaying public — received only 12 per cent of the advantages.

The Treasury Department study said that some of the loopholes benefiting higher income taxpayers were among last year's largest tax writeoffs. For instance, 68 per cent of the benefits from special treatment for capital gains ($6.9 billion) went to individuals with incomes over $50,000; 85 per cent of the benefits from tax-free bond interest ($1.7 billion) went to those in the over $50,000 category. Other major tax breaks going primarily to this group included the depletion allowance for oil, gas and hard minerals, accelerated depreciation on housing investments, and charitable contributions to education.

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
Tax Reform