Project Note No. 42
Executive Summary
This is the third in a series of studies reviewing major areas of Federal taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.
ation. The first, Federal Excise Taxes, was published in 1956 and the second, Are High SurtaxA surtax is an additional tax levied on top of an already existing business or individual tax and can have a flat or progressive rate structure. Surtaxes are typically enacted to fund a specific program or initiative, whereas revenue from broader-based taxes, like the individual income tax, typically cover a multitude of programs and services.
Rates Worthwhile, in 1959.
The purpose of this study is to examine the major issues involved in recent proposals for modification of the corporate rate structure, and to consider whether these changes are desirable.
Questions of tax policy and structure have particular significance at this time because new demands for defense spending for missiles and other weapons virtually insure that Federal expenditures will, remain at high levels indefinitely. This makes it essential that our tax system be designed for the long term, with the least possible weakening effect on our national economy.
Chapter I of this study backgrounds the present corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. situation and summarizes the conclusions. Evidence for the conclusions is laid out in Chapter II, which deals in detail with the issues involved in recent proposals, and in Chapter III, which coven the issue of rate revision versus a general reduction in the corporation tax.
This study was prepared by the Research Department of Tax Foundation. In charge of this project was George A. Bishop, Senior Researcher.
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