Revenue Act of 1936

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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[edit]

Tax on corporations[edit]

Normal tax[edit]

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)
0 8
2,000 11
15,000 13
40,000 15

Surtax on undistributed profits[edit]

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 10 7
from 10 to 20 12
from 20 to 40 17
from 40 to 60 22
over 60 27

Tax on individuals[edit]

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)
0 4 0 4
4,000 4 4 8
6,000 4 5 9
8,000 4 6 10
10,000 4 7 11
12,000 4 8 12
14,000 4 9 13
16,000 4 11 15
18,000 4 13 17
20,000 4 15 19
22,000 4 17 21
26,000 4 19 23
32,000 4 21 25
38,000 4 24 28
44,000 4 27 31
50,000 4 31 35
56,000 4 35 39
58,000 4 35 39
62,000 4 39 43
68,000 4 43 47
74,000 4 47 51
80,000 4 51 55
90,000 4 55 59
100,000 4 58 62
150,000 4 60 64
200,000 4 62 66
250,000 4 64 68
300,000 4 66 70
400,000 4 68 72
500,000 4 70 74
750,000 4 72 76
1,000,000 4 73 77
2,000,000 4 74 78
5,000,000 4 75 79
  • 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[edit]

References[edit]

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

Further reading[edit]

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