the large decline in income taxes and to substantial increases in manufacturers' excise and other taxes. It is important to note, however, that the gains in miscellaneous internal-revenue receipts, particularly beginning with the fiscal year 1934, owe much to the taxes on alcoholic beverages, following the repeal of the eighteenth amendment, and to those on estates, gifts, capital stock, dividends, and excess profits. Alcoholic beverages, which yielded only $8,700,000 in the fiscal year 1932 and $43,200,000 in the fiscal year 1933, returned $259,000,000 in the fiscal year 1934, and are estimated to yield $392,000,000 and $430,000,000, respectively, in the fiscal years 1935 and 1936. Estate, gift, capital stock, dividends, and excess-profits taxes yielded $246,000,000 in the fiscal year 1934, and, despite the repeal of the tax on dividends, are expected to yield $244,000,000 and $312,000,000, respectively, in the fiscal years 1935 and 1936. Receipts from processing taxes levied under the Agricultural Adjustment Act, are estimated (on Treasury statement basis) at $589,000,000 for the fiscal year 1935, an increase of $236,000,000 over those of the preceding year, bringing the total revenues and receipts for 1935, exclusive of postal revenues, miscellaneous revenues and receipts from the realization upon assets, to $3,484,000,000. When miscellaneous revenues and receipts from the realization upon assets are added, the estimated total belonging to the general and special accounts becomes $3,711,600,000, exclusive of postal revenues.' For the fiscal year 1936 the estimated total revenues and receipts belonging to the general and special accounts, exclusive of postal revenues, miscellaneous revenues, and receipts from the realization upon assets, amount to $3,742,000,000. When miscellaneous revenues and receipts from the realization upon assets are added, the estimated total becomes $3,991,900,000, exclusive of postal revenues.1 EFFECTS OF RECENT REVENUE LEGISLATION The effects of recent revenue legislation will be felt unequally in the fiscal years 1935 and 1936. The Revenue Act of 1934, which eliminated some taxes but increased the yields of others, will be fully reflected in the collections of the fiscal year 1936, but only partly so in the fiscal year 1935. Thus, the increased yields from income taxes provided by this act will affect 1935 collections only in the second half of that fiscal year, whereas they will be fully reflected in the collections of the fiscal year 1936. A similar situation obtains with respect to the changes in the gift taxes. Likewise, revisions made in the estate taxes will not become fully reflected in collections until the fiscal year 1936, because estate tax returns are not required to be filed until 1 year after death. It is estimated that the net effect of the Revenue Act of 1934, combined with that of the Treasury's changed policy with respect to depreciation allowances, will be an addition of approximately $80,000,000 to the revenues of the fiscal year 1935, and of approximately $304,000,000 to those of the fiscal year 1936. The increased receipts from income taxes attributable to these changes are estimated at $87,000,000 and $142,000,000, respectively, in the fiscal years 1935 and 1936; and those from estate, gift, capital stock, and excess profits taxes, at $23,000,000 1 For the amounts and details of estimated postal revenues, see the Annexed Budget of the Post Office Department. The estimated increase is the net result of gains in revenue derived from improvement in business activity, the changes inaugurated by the Treasury in its administration of depreciation allowances, the reenactment of the capital stock and excess-profits taxes, and the upward revisions in the yields of income, estate, and gift taxes incorporated in the Revenue Act of 1934, among other factors; less decreases in revenue occasioned principally by the removal of certain taxes, chiefly the taxes on dividends and checks, and by smaller customs receipts. Collections from the current corporation income taxes in the fiscal year 1935 are estimated at $440,000,000, an increase of $119,000,000 over the actual collections for the fiscal year 1934. The higher level of corporate earnings is expected to contribute about $83,000,000 of this increase. The remainder is expected to be derived from the effects of the elimination of consolidated returns, the imposition of a surtax on personal holding companies, and the changed provisions with regard to reorganizations in the Revenue Act of 1934; and from the Treasury's change in its administration of depreciation allowances. The last-named factor is also expected to add to the results of the special efforts of the Bureau of Internal Revenue to collect back taxes, the collections of which are estimated at $167,000,000 in 1935, an increase of $26,000,000 over 1934. Current individual income taxes are estimated to yield $444,000,000 in the fiscal year 1935, an increase of $89,000,000 over the preceding year, of which approximately $26,000,000 is attributable to the net effect of changes in the rate structure and in the capital gains and losses provisions incorporated in the Revenue Act of 1934. Despite a substantial decline in anticipated collections from manufacturers' excise taxes, stamp taxes, and certain other sources, total miscellaneous internal revenues are estimated at $1,543,000,000 (on the collection basis) in the fiscal year 1935, an increase of $60,000,000 over those of the preceding year. The Revenue Act of 1934 repealed taxes on soft drinks, candy, and checks, and reduced from 5 cents per $100 to 3 cents per $100 the stamp tax on sales of produce for future delivery. Taxes on gasoline, moreover, are estimated to yield $43,000,000 less in the fiscal year 1935 than in the previous year because a 11⁄2-cent rate per gallon, imposed by the National Industrial Recovery Act, was in effect during part of the fiscal year 1934, whereas the 1-cent rate per gallon is scheduled to be in effect throughout the fiscal year 1935. A further loss of revenue in the fiscal year 1935 results from the repeal of the tax on dividends, which, during the 6 months it was in effect in the fiscal year 1934, yielded more than $50,000,000. Increased receipts from estate taxes, resulting mainly from the estimated increase in the value of estates, and, to a slight extent, from the application of the increased rates provided by the Revenue Act of 1934, as well as greater revenues resulting from the growing domestic manufacture and consumption of distilled spirits and wines, fermented malt liquors, and tobacco, will, it is estimated, more than counterbalance the losses in revenue mentioned immediately above. Changes in estimated collections from principal sources of miscellaneous internal revenue in the fiscal year 1935, as compared with actual collections of the fiscal year 1934, are summarized in the following table: Receipts from principal sources of miscellaneous internal revenue [In millions of dollars] Customs receipts for the fiscal year 1935 are expected to be about $26,000,000 smaller than those of the preceding year. The decrease is to be attributed in part to the reduction in duty on Cuban sugar and to a smaller volume of other dutiable imports, exclusive of alcoholic beverages. The duty on Cuban sugar was reduced from 2 cents per pound to 1.5 cents per pound, effective June 8, 1934; and to nine-tenths of 1 cent per pound, effective_September 3, 1934, after the signing of the Cuban Trade Agreement. The effect of the reduced sugar duty upon the customs receipts of the fiscal year 1935 was partly counteracted by the concentration in the latter half of the calendar year 1934 of a large part of the year's quota for Cuban sugar imports. Further counteracting, in part, the decline in customs revenues from sugar and other imports, is an estimated increase of $10,000,000 in the fiscal year 1935 of revenues from imports of distilled spirits and fermented liquors. Processing taxes are estimated to yield $571,000,000 in the fiscal year 1935 an increase of $200,000,000 over collections of the preceding fiscal year. The largest increase is anticipated in corn-hog taxes, which are expected to rise from $81,500,000 in the fiscal year 1934 to $217,000,000 in 1935. A very substantial increase will likewise take place in the case of sugar receipts which are expected to rise from less than $170,000 in 1934 to $82,000,000 in 1935. Collections from processing taxes on tobacco are estimated to rise from $18,000,000 to $33,000,000, and on wheat from $117,600,000 to $121,000,000. Collections from the cotton taxes, including jute and paper fiber, on the other hand, are expected to decline from $154,000,000 in 1934 to about $111,000,000 in the fiscal year 1935. The processing tax on peanuts, which was not effective in the fiscal year 1934, is expected to yield $5,000,000 in 1935. The estimated collections of the various processing taxes for the fiscal year 1935 are based upon an analysis of the probable domestic consumption of each commodity. Factors likely to affect consumption, such as supply, demand and prices, were considered in making the estimates. Likewise, the actual volume of processing and the total collections from each tax up to October 31, 1934, were taken into account before arriving at the estimate of collections for each commodity. Each processing tax, levied under the Agricultural Adjustment Act, becomes effective with respect to an agricultural commodity at the beginning of the next marketing year subsequent to the date on which the Secretary of Agriculture proclaims that rental and benefit payments are to be made with respect to that commodity. This tax continues in effect until the end of the marketing year in which the payment of rental and benefits cease. The act also provides for a tax equivalent to the processing tax on floor stocks when the tax first becomes effective; upon imports of products of basic commodities on which a tax is effective, and, under certain circumstances, upon competing commodities. The only compensating taxes currently effective are on the processing, under some conditions, of paper and jute fiber. The rate of the processing tax imposed on each commodity is determined in accordance with the provisions of the Agricultural Adjustment Act. The rates currently effective are: Cotton, 4.2 cents per pound; wheat, 30 cents per bushel; corn, 5 cents per bushel; hogs, $2.25 per hundredweight; sugar, 0.5 cent per pound (raw value); peanuts, 1 cent per pound, and tobacco, zero to 6.1 cents per pound--farm sales weight (different rates for different types of tobacco). Miscellaneous revenues for the fiscal year 1935 are estimated at $218,000,000, representing an increase over the previous fiscal year of $65,000,000. This increase is practically all due to one item, that is, the profits of the mint from coinage and bullion deposit. Receipts from the realization upon assets are estimated at $9,400,000 for the fiscal year 1935, or only slightly above the actual receipts for 1934. REVENUE ESTIMATES FOR THE FISCAL YEAR 1936 Total collections from customs and internal revenue, exclusive of processing taxes, for the fiscal year 1936 are estimated at $3,172,000,000, if the temporary taxes expiring June 30, and July 31, 1935, are extended. This figure represents an increase from these sources of $291,000,000 over the estimated collections of the fiscal year 1935, and of $571,000,000 over the actual receipts of the fiscal year 1934. If the temporary taxes are not extended, customs and internal revenue, excluding proc essing taxes, will be reduced by approximately $378,000,000; and $11,000,000, respectively; that is, to $2,783,000,000, or $112,000,000 less than the estimated receipts from these sources in the fiscal year 1935. Receipts from income taxes in the fiscal year 1936 will fully reflect the upward revision of the Revenue Act of 1934 and will gain further because of the moderately higher incomes anticipated for the calendar years 1934 and 1935, as compared with those of 1933 and 1934. Total income-tax collections are estimated at $1,188,000,000, an increase of $137,000,000 over the estimated collections for the fiscal year 1935. Current corporation income taxes are estimated to yield approximately $69,000,000 more than in the fiscal year 1935, principally by reason of the revised provisions. of the Revenue Act of 1934. Current individual income taxes are estimated to gain $62,000,000, the greater part of which will reflect the changes in the rate structure and in the capital gains and losses provisions incorporated in the Revenue Act of 1934. Revenue from back tax collections is estimated at $173,000,000, or $6,000,000 more than the estimate for 1935. If the temporary taxes expiring June 30 and July 31, 1935, are extended, important increases are anticipated in miscellaneous internal revenue receipts during the fiscal year 1936. Receipts from estate taxes and gift taxes will reflect fully the increased rates of the Revenue Act of 1934 and are estimated to yield $191,000,000 and $25,000,000, respectively, representing increases of $54,000,000 and $14,000,000 as compared with estimated receipts from these taxes in the fiscal year 1935. Revenues from distilled spirits and wines and from fermented liquors, including special taxes, are estimated to show increases of $27,000,000 and $11,000,000, respectively, over 1935, partly in consequence of the estimated higher level of incomes and partly because of the rising trend in the domestic manufacture and consumption of distilled spirits and wines due to improvement in quality, combined with a reduction in illicit manufacture. The repeal of the tax on checks, effective as of January 1, 1935, collections from which are estimated to yield $24,000,000 in the fiscal year 1935, will offset part of the gains over 1935 from other sources. Issues of securities. Stock transfers- Sales of produce for future delivery Admissions___ Total.. Total reduction in revenue.. 191.0 25.0 Jewelry (watches, clocks, field glasses, etc.) – Sporting goods, cameras, and lenses.. Telephone, telegraph, radio, and cable facilities, etc... 202. 6 227.4 466.0 35.3 26.0 134.9 1,308.2 Transportation of oil by pipe lineStamp taxes, bond transfers and deeds of conveyance Increase (+), decrease (-), 1936 compared with 1935 +54.0 +14.0 +27.0 +11.0 +21.0 -24.2 -280.6 -20.3 -36.7 -234.8 $22, 600, 000 900, 000 6, 400, 000 154, 700, 000 32, 300, 000 3, 000, 000 26, 600, 000 5, 100, 000 20, 100, 000 11, 000, 000 2, 700, 000 1, 600, 000 3, 600, 000 5, 000, 000 4, 000, 000 2, 400, 000 700, 000 18, 500, 000 9, 400, 000 13, 800, 000 344, 400, 000 5, 400, 000 10, 300, 000 4, 300, 000 13, 300, 000 33, 300, 000 377, 700, 000 Customs receipts are estimated at $298,000,000 for the fiscal year 1936, assuming that temporary duties on certain commodities (coal, lumber, petroleum products, copper, and copper products) are extended, an increase of $11,000,000 over the estimated collections of 1935. Decreases are expected in collections from Cuban sugar imports and from imports of distilled spirits and fermented liquors, but other dutiable imports are expected to more than counterbalance these reductions. The lower duty on Cuban sugar will be effective throughout the year and, hence, is not expected to yield as much revenue as in the fiscal year 1935, when imports that would normally have been made in the fore part of the calendar year 1934, were concentrated in the latter half of that year, thus swelling the customs receipts of the 1935 fiscal year. A decline of some $3,000,000 is anticipated in the receipts from duties. on imports of alcoholic beverages by reason of improvement in the quality of the domestic product. Receipts from processing taxes for the fiscal year 1936 are estimated at $570,000,000. This estimate is made on the assumption that it will be necessary to continue the work of the Agricultural Adjustment Administration on practically the same basis as during the fiscal year 1935. Miscellaneous revenues for the fiscal year 1936 are estimated at $171,000,000, a reduction of about $47,000,000, from the estimates of the previous fiscal year. This reduction is due to an estimated falling off in the profits of the mint from coinage and bullion deposits. Receipts from the realization upon assets for the fiscal year 1936 are estimated at $79,000,000, or an increase over the estimates of the preceding fiscal year of $70,000,000. This increase is due almost entirely to the anticipated repayment of loans made to the States and municipalities by the Public Works Administration. The receipts of the various trust accounts, appended to Statement No. 1, are not applicable to the financing of the general expenditures of the Government. They are, therefore, not carried into the General Budget Summary and supporting schedules, except into Supporting Schedule No. 4, where the balances of the trust accounts enter into the computation of the general fund balance. These receipts for the fiscal year 1936 are estimated, in the aggregate, at $169,000,000, or about $2,000,000 more than the estimates for 1935 and some $7,000,000 more than the actual figures for 1934. |