Irascible Comments on the Revenue Laws

Abstract

EPTEMBER 20 the President of the United States signed the Revenue Act of 1941, an act of which one damning thing may and should be said. It is an act drawn in the tradition of the last twenty years and giving no evidence of a genuine attack upon the basic fiscal problems of the nation. We have had a federal income tax since 1913 and a federal estate tax since I9I6. In the early I920's both of these crystallized into the form which they hold today. The basic estate tax act is still the act of 1926. The income tax law has been changed at almost every session of Congress since its original enactment but remains much the same. For almost twenty years the changes have been of a purely tinkering type. Rates for a time were lowered; since the depression they have been raised steadily and, to some, alarmingly. Exemptions have been reduced. Minor reforms and trivial changes have been all too frequent as treasury officials and congressional advisers attempted by strictly ad hoc legislation to meet with minimum ingenuity the tax avoidance devices evolved by private counsel. Occasionally somewhat larger changes have been attempted, such as the short-lived undistributed profits tax against corporations.' Even these reforms, however, have been designed with far too great particularity. Where more sweeping alterations might have been largely successful, these small-scale efforts have sometimes failed entirely and been withdrawn, as was the undistributed profits tax, and sometimes succeeded in stopping one leak only to have other leaks spring up around the patch. Now, in 1941, with a record-breaking national debt, a business structure subject to extraordinary and often incalculable stresses, and the heaviest fiscal demands in the history of the nation, Congress has been content again to apply its old panacea: exemptions have been lowered, rates raised, and new nuisance taxes enacted. Is it not time that the entire structure be reexamined to consider what major changes could be effected more equitably to distribute and effectively to raise the tremendous and growing levies which this present demands?