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1936 › Franklin D. Roosevelt (Democratic) › Income and inheritance tax progressivity
Defense of the undistributed-profits tax as a loophole-closer; correct imperfections if found
defense_of_recordspecific_pledgecandidate_directevidence A Industry, Business & RegulationTaxation similar solutions · similar reasoning
Solution
Keep the 1936 surtax on retained corporate earnings as an extension of the individual income tax, while correcting defects in application.
Rationale
It plugs loopholes usable only by men of very large incomes and lets stockholders, not directors, decide whether earnings are reinvested; 98.5 percent of corporations pay a smaller normal tax.
Statements (2)
This new tax, called the undistributed profits tax, is merely an extension of the individual income tax law and a plugging-up of the loopholes in it, loopholes which could be used only by men of very large incomes.
What we are concerned with primarily is principle, and the principle of this law is sound. If in its application imperfections are discovered, they must be corrected for the good of American business.
Follow-through
abandoned
The tax Roosevelt defended at Worcester was cut to a token in 1938 and repealed in 1939; he let the 1938 bill become law without his signature rather than veto it.
Mechanisms
| Date | Type | Name | Effect | Consistent? | Source |
|---|---|---|---|---|---|
| 1938-05-28 | statute | Revenue Act of 1938 reduces the undistributed-profits surtax | Tax largely gutted; law without signature. | no | Undistributed profits tax - Wikipedia |
| 1939-06-29 | statute | Revenue Act of 1939 repeals the tax | Repeal. | no | Undistributed profits tax - Wikipedia |
Obstruction
congresseconomy Blamed by business for the 1937 recession; Congress dismantled it. source
Assessments
The 'sound principle' of 1936 was surrendered to business and congressional opposition without a veto.
Other positions on this issue
- Raise revenue by graduated income, inheritance and profits taxes, not taxes on necessities — Franklin D. Roosevelt, 1932 directional_stance
- Steeply increased income and inheritance taxes — Norman Thomas, 1932 directional_stance
- Taxes levied according to ability to pay; lower taxes for 99 percent, higher at the top — Franklin D. Roosevelt, 1936 directional_stance
1936-fdr-defend-undistributed-profits-tax · created by claude-fable-5-1 · review: unreviewed