Download Special Report: A Summary of President Kennedy’s Tax Proposals
Special Report
Foreword In proposing a major revision of the 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. system, President John F. Kennedy’s tax message of January 24, 1963 emphasized that the changes attack “the most urgent task facing our nation at home today.” The goals are described as (1) “to end the tragic waste of unemployment and unused resources;” (2) “to step up the growth and vigor of our national economy;” (3) “to increase job and investment opportunities;” and (4) “to improve our productivity.” The present tax structure is labeled as the largest single barrier to the achievement of these goals.
The benefits to the economy from adoption of this program are described as (1) a step up in total output and economic growth several times as great as the tax cut itself; (2) reduced unemployment; (3) maintenance of price stability; (4) improvement in the nation’s balance of payments position; (3) a large increase in consumer purchases; (6) expansion of investment in new productive facilities as a result of growing consumer markets; and (7) an increase in revenues for state and local governments as national income expands.
Benefits to the taxpayer are listed as follows: (1) Wage earners and low income families will gain an immediate increase in take-home pay. “While tax rates are to be reduced for every bracket, the largest proportionate tax reduction properly goes to those at the bottom of the economic ladder.” (2) Middle and higher income families will benefit by reduction of high rates. “This will restore an idea that has helped make our country great—that a person who devotes his efforts to increasing his income, thereby adding to the nation’s income and wealth, should be able to retain a reasonable share of the results.” (3) Businessmen and farmers will benefit by a reduction in the corporate tax from 52% to 47%; (4) Small businessmen will benefit by a reduction of 27% in the tax rate on the first $25,000 on net income.
This study provides a brief overview of the main features of President Kennedy’s sweeping tax proposals, as explained and amended by Secretary of the Treasury Dillon on February 6, 1963. No detailed analysis is attempted, but rather the major issues raised by the plan are summarized and briefly discussed.
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