Date 30 April 1942
Author unknown
Title A Scheme for a Progressive Sales Tax
Description Staff memo, Division of Tax Research, Treasury Department
Location Box 44; Papers of Roy Blough; Harry S. Truman Presidential Library, Independence, MO.


A combination of sales tax with over-all rationing, or rationed purchasing power.

(Basic assumptions: (1) That a sales tax of some type WILL be passed in any case; (2) that wide-scale rationing WILL take place.)


1. Every "income receiver" will be required to purchase sales tax vouchers (or stamps) that must be surrendered dollar for dollar with the purchase of any, and all, consumer- commodities. (Coverage as in the sales tax.) 2. To receive these vouchers he must register at a district office where an account will be set up under his name, as in a bank saving account. He must file a card stating where he is employed and the sources of his income. (AMOUNT of income need not be reported.)

3. The first $1,000 (or perhaps $750) in vouchers will be free of taxation. They may be obtained in various denominations.

4. Subsequent vouchers must be purchased at progressive cost as the amount of spending increases. The tax rate can advance with $500 or $1,000 steps.


1. To make the spender sharply conscious of the relation between consumer spending and the rising tax burden. Direct incentive to keep consumer-goods spending down in order to stay out of high rate area.

2. To avoid the excessive regressive features of the sales tax.

3. To, at the same time, gain the advantage of an over-all rationing of consumer goods.

4. To encourage saving and the spending of money for non- material satisfactions: more insurance, pay off the mortgage faster, amusements, travel.

5. To give some indirect relief to the man with heavy fixed charges; hardship cases under high income taxation.


1. Encourage bootleg market (But is that not equally true of all comprehensive rationing?)

2. Small denominations in vouchers will be somewhat awkward. (Stamps?)

3. Can you reach luxury living: the use of maids, chauffeur, housemen, etc.

4. Would sale of excess vouchers by the poor be fatal?


A somewhat similar objective might be reached by adding a section to the income tax form, requiring the listing of all non- consumer-goods spending and investing. A progressive expenditure tax could be levied on the balance net income.