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Federal Non-Income Taxes: An Examination of Selected Revenue Sources

2 min readBy: TF Staff

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Research Publication No. 1

Despite the Revenue Acts of 1962 and 1964, we are far from the goal of an equitable 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. system that will provide adequate revenue and offer the least possible impediment to efficient operation of the economy at a high rate of investment and growth.

The immediate tax problem before Congress is to decide on changes in the excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. structure. For the long run, basic questions regarding the degree of reliance on income taxes and the role of non-income taxes in the Federal system will remain after any action this year on excises.

This study examines various possibilities for use of non-income revenue sources. What taxes might be substituted, in whole or in part, for existing levies? What has been the experience in other countries with important kinds of taxes not now used by the Federal government in the United States? What are the effects of such taxes? How much revenue might they yield?

As part of the background for such an analysis, this study includes a history of Federal excises and examines the role of excises in the Federal tax system. Elizabeth Deran, Senior Research Analyst, had primary responsibility for the research and drafting of the portions of this study dealing with alternative taxes. George Bishop, Director, Federal Affairs Research, had primary responsibility for the research and drafting of Section III dealing with the present excise tax system.

The Tax Foundation is a private, non-profit organization founded in 1937 to engage in non-partisan research and public education on the fiscal and management aspects of government. Its purpose, characterized by the motto, “Toward Better Government through Citizen Understanding,” is to aid in the development t of more efficient and economical government. It serves as a national information agency for individuals and organizations concerned with problems of government expenditures, taxation, and debt.