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Mr. WIGGLESWORTH. What would that mean? I do not know what that would mean.

Mr. BLOUGH. A taxation economist is a man who is supposed to be able to analyze a taxation proposal and tell you how it will affect various parts of the national economy and various groups of people in the country; what its repercussions are likely to be; who is likely to have to bear the burden, and other economic aspects of the proposals which are made.

A principal economic analyst, for instance, is required to plan, carry out, and report on highly difficult, important, and responsible investigations on specific problems throughout the whole field of taxation in connection with Treasury policy on proposed revenue legislation. His work may cover any or all of a number of subjects such as the nature and operation of taxes and the interrelation of Federal tax provisions; the economic effects and administrative feasibility of various tax proposals; the relationship of the Federal tax system to the tax systems of States and localities; and the relationship of the Federal tax system to foreign tax systems, especially with respect to international double taxation.

For example, the excess profits tax has a great many problems, such as the so-called invested capital credit and provision of general relief for concerns which are under a hardship under existing law. We have to have people who know corporation finance, who know how business is run and operated, to see how those various proposals will affect them, and to try to take care of such hardship cases as may come up.

Mr. O'Neal. You mean you have competent people you can get for $705 per year to do that, or what is that $705 on page 29 ?

Mr. Biough. That was the amount paid during 1942.
Mr. O'NEAL. You have a junior economic analyst at $2,000.

Mr. Blough. The rate is $2,000; but, during this particular fiscal year, because this was a supplemental appropriation passed late in the year, this man received during this year only $705. He worked for less than 5 months.

Now, he would hardly be able to do the things I have mentioned; His job is in the nature of spade work, of getting the information together from which an analysis could be made.

Mr. O'NEAL. Are all those men who have graduated from college in some branch of economic analyses!

Mr. Blough. That is correct. Many of them have doctorate degrees in econmoics and most of them have had several years of training.

Mr. O'NEAL. An ordinary business person who has had business experience could not be used in this category at all?

Mr. Blough. We have been able to use a few; not very many.

Mr. O'NEAL. What is your total number of economic analysts of this class in the whole Department?

Mr. Blough. In the whole Treasury Department?

Mr. O'NEAL. It says here "detail of staff required for special tax research."

Mr. Blough. On the other page, page 32, is our staff under our regular allotment. The total is 28, and includes 13 people in professional grades.

Mr. O'NEAL. What they do is merely to determine the effect of tax legislation on the business structure of the country?

Mr. Blough. Not only on the business structure of the country, but on the consumer, the rural people, farmers, and all sorts of people in comparison with each other businessmen, manufacturers, merchants of various kinds, and so on.

Mr. O'Neal. Do they estimate the various amounts of money to be returned by each one of these different methods of taxation, too?

Mr. Blouch. We do everything but actually estimate the revenue. In order to keep the Budget figures uniform, revenue estimates are made by another division. Aside from that, we do all of the analyses.

The CHAIRMAN. Your investigators report on what would be the result if such-and-such an action were taken?

Mr. PAUL. That is right.

The CHAIRMAN. And that data is submitted to the Secretary and his immediate associates ?

Mr. PAUL. That is right.

The CHAIRMAN. And then, from the data submitted to them by the scientific investigators, they deduce their opinion !

Mr. Paul. That is right.



Estimate, fiscal year 1943, $75,340.—The additional requirements of the Division of Tax Research under the appropriation "Collecting the Internal Revenue" for the fiscal year 1913 are herewith submitted in the amount of $75,340.

In the First Deficiency Appropriation Act, 1942, approved February 21, 1942, $106,450 was appropriated under the item "Consolidated Emergency Fund (Bureau of Internal Revenue).” Of this amount, $26,950 was allocated to the Division of Tax Research and intended to provide personal services to carry out the program of tax research made necessary by the expansion of tax problems due to the war during the 5-month period, February 1 to June 30, 1942.

The full complement of personnel contemplated under the above allotment has been recruited and the entire amount of said allotment will be obligated during the remainder of the fiscal year 1942.

It will be necessary to continue this tax research during the fiscal year 1943, but the request for the additional funds for such purpose is being submitted under "Collecting the Internal Revenue" instead of "Consolidated Emergency Fund," as in 1942. In order to perform these additional research functions, the Division of Tax Research will require, during the fiscal year 1943, $75,310 for personal services, of which $70,340 is for specified positions and $5,000 for the services of consulting experts on a per diem basis when actually employed.

The estimated supplemental needs in the amount of $75,340 represents the projection into the fiscal year 1943 of funds necessary to provide the services of that portion of the staff of the Division of Tax Research whose compensation is currently being paid from funds provided from the appropriation "Consolidated Emergency Fund.” No expansion in existing staff is contemplated.

Regular allotment from Collecting the internal revenueIn order that a better understanding may be had of the appropriation status of the Division of Tax Research, it should be explained that this Division is at present and has for several years been operating with funds allotted to it from the appropriation "Collecting the internal revenue." Such allotment for the current fiscal year (1942) is in the amount of $90,000, and the allotment for the fiscal year 1943 is also in the amount of $90,000. This allotment provides for the regular funetions of the Division, which are described below under the heading “Functions of the Division of Tax Research."

The supplemental estimate for 1943 in the amount of $75,340 under "Collecting the internal revenue” is for work made necessary by the expansion of tax problems due to the war.

Functions of the Division of Tax Research

The primary functions of the Division of Tax Research are to analyze taxes and tax systems and prepare studies on the economic aspects of tax matters for the use of the Secretary, the Under Secretary, the Tax Adviser to the Secretary, and other Treasury officials, and upon request, for the Congressional Joint Committee on Internal Revenue Taxation.

Surveys of the Federal tax structure are made in the light of immediate and contemplated revenue needs and deal with the effectiveness, equitableness, and economic effects of the existing Federal tax system and of proposed changes in it. Studies are made of the distribution of the tax load, both for specific taxes and for the tax system as a whole. The operation of certain State and local taxes is studied in connection with related problems of Federal taxation. As a further basis for the study of the Federal tax structure comparative analyses are made of selected taxes in foreign countries and of foreign tax systems as a whole.

The Division also is responsible for the assembly and publication of all statistical information pertaining to Federal taxation, and in this connection exercises general supervision over the work of the Statistical Section of the Income Tax Unit in the Bureau of Internal Revenue.

Estimates of the extent and nature of the Federal, State, and local tax-exempt debt are furnished annually to the Secretary. Replies to correspondence dealing with taxation are prepared and other functions of similar nature are performed.

The Division was established as a separate organization on June 1, 1938. Its establishment as a separate Division was due to the necessity for working very closely with the Assistant Secretary in charge of tax matters. Much of the work of the Division must be highly expedited to meet day-to-day demands in conjunction with work with congressional committees. In the light of previous experience a separate organization with direct responsibility was found to be the only satisfactory method for meeting the requirements of the situation.

The economic research done by the Division is of a specialized character and incidental to the analysis of taxes and their operation. The Division does not engage in basic economic research except where necessary to fill in gaps in studies and materials prepared in other organizations in the Government. Close contact is kept with agencies collecting statistics and doing research work which would be of service.

Personnel required during fiscal year 1942 To permit the Division of Tax Research to carry out the additional program of tax research necessitated by the expansion of tax problems due to the warand which it was unable to consider with its regular staff--the Division of Tax Research was allotted $26,950 for fiscal year 1942 from the appropriation "Consolidated Emergency Fund.” Esti nated fiscal year 1942 obligations chargeable to this allotment will exhaust this amount. The full completment of additional personnel for which these funds were allotted has been recruited.

The increase in the volume of necessary work is due principally to the necessity of devising the best methods of raising large amounts of taxes to finance the war. It is due also in part to the expansion of Federal taxation in recent years, including the imposition of complicated and economically important taxes, such as the excess-profits tax. Existing taxes must be subject to continued study with respect to complaints of injustices and harmful effects and suggestions for improvement.

Personnel required during fiscal year 1943

It will be necessary during the fiscal year 1943 to continue the additional tax research program undertaken as a result of the war. For this purpose the Division of Tax Research will require $75,340_$70,340 for specified positions and $5,000 for consulting experts. This amount will be required to provide the services of that portion of the staff of the Division of Tax Research whose compensation during the fiscal year 1942 is being paid from funds provided from funds provided from the appropriation "Consolidated Emergency Fund." No expansion in existing staff is contemplated.

There are attached five exhibits as follows:

1. Statement of estimated obligations for personal services, chargeable to "Consolidated Emergency Fund,” by pay periods, for fiscal year 1942.

Statement of estimated obligations for personal services chargeable to

Consolidated Emergency Fund,by pay periods, for fiscal year 1942


1 Includes $4,840 for services of consultants on a per diem basis when actually employed.

Detail of staff required for special tax research, fiscal years 1942 and 1943


Summary of positions required for special research, fiscal years 1942 and 1943

[graphic][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][merged small][subsumed]

Detail of positions chargeable to regular allotment from the appropriation

Collecting the Internal Revenue," fiscal year 1943

[graphic][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][merged small][subsumed][merged small]

Summary of the research staff, including (1) regular employees, and (2)


employees required for special tax research, fiscal year 1943



Average annual sal

Total an

nual salary ary rate


5, 700.00
4, 600.00
3, 266. 67
2, 600.00

$9,000 13,000 22,800 23,000 11,400 19, 600 7,800 8,000


1 director of tax research
2 assistant directors of tax research
4 principal economic analysts...
5 senior economic analysts.
3 economic analysts.
6 associate economic analysts
3 assistant economic analysts

4 junior economic analysts. Clerical, administrative, and fiscal:

1 principal clerk 1 secretary to director 3 senior clerk-stenographers (secretaries) 1 head tax research records. 2 clerk-stenographers 11 senior stenographers 3 assistant statistical clerks 1 classifier

2 junior stenographers Custodial: 1 messenger.. Consulting experts..


1, 920.00
1, 630.91
1, 620.00
1, 620.00
1, 440.00

2,800 2, 300 6, 100 1, 920 3, 660 17, 940 4,860 1,620 2,880 1,320 5,000



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