Revenue Act of 1936

The Revenue Act of 1936, 49 Stat. 1648 (June 22, 1936), established an "undistributed profits tax" on corporations in the United States .

It was signed into law by President Franklin D. Roosevelt.

The act was applicable to incomes for 1936 and thereafter. Roosevelt sought additional permanent revenue of $620,000,000 and temporary revenue of $517,000,000. To secure the permanent revenue he suggested the substitution of a tax on undistributed earnings of corporations. Individual rates were raised only on the very rich (that is, income over $5 million a year.). [1]

See also

Tax on corporations

Normal tax

A Normal Tax was levied on the net income of corporations as shown in the following table.

Revenue Act of 1936
Tax on Corporations

49 Stat. 1655 [2]

Net Income
(dollars)
Rate
(percent)
08
2,00011
15,00013
40,00015

Surtax on undistributed profits

A Surtax was levied on corporations on "undistributed profits", i.e. profits not paid out in dividends, as shown in the following table.

Revenue Act of 1936
Surtax on Undistributed Profits

49 Stat. 1655 [2]

Application
(percent of
undistributed net income)
Surtax Rate
(percent)
up to 107
from 10 to 2012
from 20 to 4017
from 40 to 6022
over 6027

Tax on individuals

A normal tax and a surtax were levied against the net income of individuals as shown in the following table.

Revenue Act of 1936
Normal Tax and Surtax on Individuals

49 Stat. 1653 [2]

Net Income
(dollars)
Normal Rate
(percent)
Surtax Rate
(percent)
Combined Rate
(percent)
0404
4,000448
6,000459
8,0004610
10,0004711
12,0004812
14,0004913
16,00041115
18,00041317
20,00041519
22,00041721
24,00041721
26,00041923
32,00042125
38,00042428
44,00042731
50,00043135
56,00043539
58,00043539
62,00043943
68,00044347
74,00044751
80,00045155
90,00045559
100,00045862
150,00046064
200,00046266
250,00046468
300,00046670
400,00046872
500,00047074
750,00047276
1,000,00047377
2,000,00047478
5,000,00047579
  • Exemption of $1,000 for single filers and $2,500 for married couples and heads of family. A $400 exemption for each dependent under 18.

See also

References

  1. Roy G. Blakey, and Gladys C. Blakey. "The Revenue Act of 1936." American Economic Review (1936): 466-482 online.
  2. Facsimile from Statutes at Large

Further reading

  • Paul, Randolph E. "The Background of the Revenue Act of 1937." U. Chicago Law Review . 5 (1937): 41+ online



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