Table of Contents Revenue Revision Studies, 1937 -- Excise Taxes Summary of Findings and Recommendations A. Introduction B. Historical Background C. Existing Excise Taxes D. The Economics of Excise Taxes E. Analysis of the Individual Taxes I. The Automotive Group (1) Gasoline sales (2) Gasoline produced from natural gas (3) Sale of crude petroleum (4) Refining of crude petroleum (5) Automobile and auto truck chassis and bodies and motorcycles (6) Accessories for automobiles, trucks and motorcycles (7) Tires and inner tubes (8) Sale or use of lubricating oil (9) Imports of crude petroleum, gasoline, refined petroleum, and products (10) Transportation of crude petroleum by pipe line II. The Group of Admissions Taxes (11) Amounts paid for admission to any place (12) Tickets of admission sold at places other than the ticket office of the theater, etc. (13) Excess admission charges made by proprietors, managers, or employees of theaters, etc. (14) Use or lease of seats or boxes in opera houses, etc. (15) Admissions to night clubs, etc. III. The Group of Documentary Stamp Taxes (16) Sales or transfers of stock and similar interests (17) Issues of bonds (18) Transfers of bonds (19) Issues of capital stock (20) Passage tickets (21) Foreign insurance policies (22) Deeds of conveyance (23) Sales of produce for future delivery (24) Playing cards (25) Documentary stamps sold by post offices (26) Silver bullion transfers IV. Other Taxes (27) Brewers' wort and malt products (28) Imports of coal and coke (29) Lumber (30) Copper and copper concentrates (31) Imports of certain oils, etc. (32) Toilet preparations (33) Furs (34) Radio parts (35) Mechanical refrigerators and certain components thereof (36) Sporting goods (37) Firearms, shells and cartridges (38) Cameras (39) Matches (40) Chewing gum (41) Electrical energy (42) Telephone, telegraph, cable and radio messages, etc. (43) Use of safe deposit boxes (44) Dues and initiation fees (45) Pistols and revolvers (46) Processing of certain oils (47) Regulatory taxes V. Conclusion F. Possible Sources of New Revenue General Considerations (a) Taxes on tractors and trailers (b) Radio station tax (c) Tax on wagers on horse and dog races G. Excises Not Considered for Revision: Liquor, tobacco and oleomargarine Appendix "A": "Reports of the Miscellaneous Tax Unit upon the History and Application of Various Miscellaneous Taxes"
TO Mr. Magill FROM Mr. Haas Subject: TAX REVISION STUDIES, 1937 -- EXCISE TAXES
Summary Of Findings And Recommendations
The accompanying memorandum examines in some detail the place of excise taxes (other than those imposed on liquor, tobacco and oleomargarine) in the immediate and more distant Federal tax structure. The more significant of the conclusions are as follows:
(1) Excise taxes have been enacted during practically every critical period in Federal fiscal history and their utilization during the last depression involves no innovation.
(2) During the past five years excise taxes have played a significant but declining role in the Federal Government's tax revenues and, with the increased yield of direct taxes, their relative importance is certain to decline further.
(3) Generally speaking, excise taxes other than those imposed for regulatory purposes are less desirable than progressive direct taxes and, so far as possible, should be replaced by a system of direct taxes. Other considerations, however, point to the desirability of retaining some measure of indirect taxation in the permanent tax structure.
(4) The retention of excise taxes is necessitated by the fact that the broadening of direct taxes to reach the smallest of income groups is not feasible or economically justifiable. Excise taxes, therefore, may justly be assigned a permanent place in the tax structure, viewed as supplements to the income tax and designed in part to bolster depression revenues but more particularly to supplant direct taxes on the lower income groups.
(5) The case for the permanent inclusion of excise taxes in the tax structure is further strengthened by considerations of revenue stability. During periods of depression individuals in the higher income groups frequently have a minimum or no taxable income and are thus freed of income tax liability, producing wide fluctuations in income tax collections, rendering the stabilizing qualities of indirect taxes indispensable.
(6) Present and anticipated near-future revenue requirements preclude the immediate wholesale elimination of excise taxes. Governmental functions initiated or expanded by the Federal Government during the recent depression, bid fair to remain permanent and burdensome features of the budget for some time, thus raising revenue requirements above pre-depression levels and necessitating some recourse to excise taxation.
(7) While excise taxes cannot be dispensed with, it must be conceded that the present system of excise taxation is deficient in that it contains a number of individual taxes which are inequitable in their incidence, complex in administration, and conflicting with other governmental imposts, without being substantial revenue producers. The system also contains other taxes, regulatory in character, which have outlived their usefulness. In consequence, the existing tax structure could be markedly improved by the elimination of the least desirable excises.
(8) The required revision of the existing excise tax structure should be governed by consideration of (a) productivity, (b) incidence, (c) equity, (d) ease of administration, (e) effect upon economic enterprise, and (f) effect upon State and local taxation, in the light of present and probable future revenue needs.
(9) On the basis of these considerations, repeal of certain of the excise taxes, ranked in three successive groups, is recommended as follows:
Excise taxes recommended for repeal
Item Tax Fiscal year 1936 Collections Number of taxpayers Group I (1) Regulatory taxes no longer required 1 (a) Brewer's wort $1,008,273.85 40 2 (b) Gasoline produced or 38,751.80 406 refined from natural gas 3 (c) Sale of crude petroleum 563,766.88 694 4 (d) Refining of crude 561,235.89 400 petroleum (2) Taxes on commodities in common use 5 (a) Toilet preparations 4,823,967.94 6,1006 (the 5 percent tax) (b) Cameras 577,925.70 50 7 (c) Chewing gum 807,279.40 40 8 (d) Furs 3,321,057.14 2,100 9 (e) Radio parts 5,075,270.82 300 10 (f) Automobile accessories 7,110,188.33 2,600 (3) Import taxes (more properly to be treated under the tariff Laws) 11 (a) Imports of certain 1,500,000.00 /*/ /1/ oils, etc. 12 (b) Imports of copper, 5,684,000.00 /*/ /1/ coal, and lumber 13 (c) Imports of crude 7,281,000.00 /*/ /1/ petroleum, etc. Total 38,352,717.75 12,730 Group II (Recommended for repeal subsequent to Group I) 14 (a) Processing of certain 27,691,080.79 340 oils 15 (b) Mechanical refrigerators 7,939,063.75 100 16 (c) Matches 7,106,359.21 50 17 (d) Sporting goods 5,531,122.72 1,200 18 (e) Auto trucks, etc. 7,000,000.00 /*/ 950/2/ 19 (f) Firearms, shells and 2,494,574.54 100 cartridges 20 (g) Safe deposit boxes 1,997,409.57 10,600 Total 59,759.610.58 13,340 Group III (Recommended for repeal subsequent to Groups I and II) 21 (a) Electrical energy 33,575,179.25 2,400 22 (b) Telephone, telegraph, 21,098,347.65 460 cable and radio messages, etc. 23 (c) Lubricating oils 27,102,831.57 455 Total 81,776,358.47 3,315 Grand total $79,888,686.80 29,385 FOOTNOTES TO TABLE /*/ Approximated. /1/ Not available. /2/ Includes manufacturers of other automobile chassis, etc. END OF FOOTNOTES
(10) The existing tax structure could be further improved both in productivity and equity by amending statutory provisions covering certain of the excise taxes, as follows:
(a) Tax on stock sales or transfers -- to replace the present tax by changing the base and imposing a 1/4 of 1 percent tax determined on the value of the transaction.
(b) The 10 percent tax on toilet preparations -- to include those who prepare or package toilet preparations in the form in which they are to be sold to the consumer for consumption or use.
(c) Tax on ticket brokers -- to limit present 10 percent rate to excess charges not exceeding 75 cents, and to increase such rate to 25 percent on excess charges over 75 cents.
(d) Tax on admissions and dues -- to extend the liability for the tax to anyone responsible for the collection of the tax but fails to do so, whether wilfully or otherwise.
(e) Tax on admissions to night clubs -- to increase rate to a flat 2 percent of total admission charges.
(f) Tax on sporting goods -- pending its repeal, to define more clearly articles liable to the tax.
(g) Tax on radio parts -- pending its repeal, to be revised so as to apply only to completed radio sets, with provision for allowance of tax-free sales of parts.
(11) The regulatory taxes (other than those listed in Group 1 on the preceding page -- "Regulatory taxes no longer required"), the documentary stamp taxes, the admissions taxes and the taxes on dues and initiation fees should be retained in the permanent tax structure.
(12) In the event of pressing revenue needs, the scope of excise taxation could conceivably be extended to numerous commodities and services not now taxed. However, the taxable items which have greatest revenue producing potentialities consist of commodities and services which are everyday necessities to the masses of the population. Taxes imposed upon them would fall most heavily on segments of the population possessing the least economic ability. Notwithstanding the herein contained recommendation for decreasing reliance upon excise taxation, sight should not be lost of the possibilities of continuing to derive the same amount of excise revenue in a more desirable manner than is accomplished by utilization of some of the excise taxes now in effect. For this reason, if the loss of revenue inherent in the repeal of those excises enumerated in Group I should have to be recouped through other indirect taxes, the list of excise taxes could be extended to include tractors and trailers, radio stations, and wagers on horse and dog races.
(13) No detailed consideration is given in this memorandum to the revision of the liquor, tobacco, and oleomargarine excises. The retention of the taxes on liquor and tobacco are indicated because of their well established and significant position in the Federal tax structure. The tax on oleomargarine is of a regulatory nature and is predicated on non-fiscal considerations of a character which for the present were not evaluated.
TO Mr. Magill FROM Mr. Haas Subject: Tax Revision Studies, 1937 - Excise Taxes
The taxes herein considered constitute that group of taxes generally denominated as excises. In the revenue law, (Titles IV and V of the Revenue Act of 1932) they are classified as manufacturers' excise taxes, documentary stamp taxes, and miscellaneous excise taxes. With the exception of the levies imposed on liquor, tobacco and oleomargarine, the discussion embraces all of the excise taxes in effect at the present time. This group of levies accounted for approximately $538,000,000, or 15.6 percent of internal revenue collections in the fiscal year 1936.
Specifically, the problem involved is the desirability of retaining in their present form, or in a modified form, some or all of these taxes in (1) the permanent and (2) the more immediate Federal tax structure, viewed in the light of economic principles and in the light of the Federal Government's revenue needs. Accordingly, the examination of each of these levies takes cognizance of (a) productivity, (b) incidence, (c) equity, (d) ease of administration, (e) effect upon economic enterprise and (f) effect upon State and local taxation.
B. Historical Background
At the outset it should be noted that the existing excise taxes, though mostly depression additions, represent no departure in federal taxation practice. The history of excise taxation in the United States is largely the history of emergency Federal financing. Excise taxes have been collected almost without exception during every critical period in American Federal finance. They were employed in 1791, in 1812, in 1862, in 1898, and in 1914. Their introduction in 1932 was thus in conformity with well-established precedent.
In the first experiment with excise taxation conducted by Alexander Hamilton, taxes were imposed on liquor, tobacco, snuff carriages, sales at auction, and on various legal instruments. These imposts, enacted on March 3, 1791, yielded approximately $520,000 by 1799. Three years later, with the end of the Federalist administration, they were repealed.
Excise taxes were adopted for a second time during the War of 1812. The articles taxed included carriages, sugar, liquors, legal instruments, bank notes, bonds, sales at auction, and retail sales license taxes on wines and liquors. Their yield reached a maximum of $5,000,000 in 1816. With the coming of postwar prosperity in 1817 all these taxes were repealed.
The third use of excise taxes was provoked by Civil War revenue needs. The levies imposed by the Act of 1862 included license taxes on trades, taxes on malt and distilled liquors, various levies (virtually turn-over taxes) on manufactures, and products. Subsequent laws broadened the scope of the Act, the most comprehensive being the Act of 1864. Some rate increases were made in 1865 contributing to the $236,000,000 collected from these sources (exclusive of income and inheritance taxes) during 1866. In the next four years, however, the system was gradually contracted. By 1870, the most burdensome taxes were withdrawn and by 1873 all, with the exception of the taxes on liquor and tobacco, were discontinued.
The war with Spain was the next occasion for the expansion of the internal taxes and for advances in rates. In 1898 nearly all rates on liquor and tobacco were doubled, and special taxes were imposed on bankers, brokers, proprietors of theaters, and other places of amusement. Stamp taxes were imposed on issues and sales of corporation securities, bank checks, bills of exchange, telephone and telegraph messages, insurance policies and other instruments, patent medicines, toilet articles, chewing gum and wine. In 1902, with the passing of the emergency, all of these taxes were repealed.
The fifth large scale enactment of excise taxes is attributable to the World War. The Act of October 22, 1914, increased the rates on beer and wine and levied special taxes on bankers, brokers, theaters and other amusement places, tobacco manufacturers and tobacco dealers. A series of stamp taxes was applied to various documents as well as cosmetic and toilet goods. Subsequent revenue acts added taxes on transportation and other facilities of commerce, admissions and dues, and on a long list of articles of general consumption. Collections reached a peak in 1920 with a total in excess of $80,000,000. After the War, most of these taxes were abolished, excepting those designed for regulatory purposes and those imposed on tobacco, admissions, distilled spirits and other alcoholic beverages.
C. Existing Excise Taxes
The need for Federal revenue during the last depression directed attention once more to excise taxes. As a result, in 1932, (Revenue Act of 1932, Titles IV and V) there was enacted a large group of manufacturers' excise and other miscellaneous taxes. These taxes, originally limited to one year were, with some exceptions, renewed in 1933, 1935, and 1937. Title IV covered a long list of commodities including lubricating oils, automobiles and parts, tires, furs, toilet goods, jewelry, radios, mechanical refrigerators, sporting goods, cameras, matches, candy, chewing gum, soft drinks, electrical energy, gasoline, and imports of coal, crude petroleum and products, lumber and copper. The miscellaneous group (Title V) included taxes on telegraph, telephone, cable and radio messages, admissions, issues and transfers of stocks and bonds, deeds, sales of produce for future delivery, transportation of oil by pipe line, safe deposit boxes, checks and boats. In 1934, 1935, and 1936, the list was enlarged by the addition of such items as crude petroleum, fire arms, silver bullion and specified oils and seeds. The taxes on checks, candy, soft drinks, jewelry and boats have been discontinued. All the rest, with exceptions of some designed for regulatory purposes, will either expire or revert to lower rates in 1939. Public Resolution No. 48, 75th Congress, approved June 29, 1937.
The three groups of excises generally classified as manufacturers' excise taxes, miscellaneous taxes and stamp taxes, with the exception of those imposed on oleomargarine, alcoholic beverages and tobacco, produced approximately $44,000,000, $391,000,000, $552,000,000, $490,000,000 and $538,000,000 during the fiscal years 1932, 1933, 1934, 1935, and 1936, respectively. (See Chart 1.) Their relative importance in all internal revenue rose from 2.8 per cent in 1932 to almost a quarter of the total in 1933 and 1934 but, partly as a result of a reduction in the tax rate on gasoline and in part because of the increase in the yield of direct taxes, declined to 17.7 percent in 1935 and 15.6 percent in 1936. Reference to Chart 2 will reveal that excise taxes have played a significant but declining role in the Federal Government's tax revenues during the past five years. Their relative importance is certain to decline further even without additional limiting legislation. With a continued rise in national income and property values and with the passage of sufficient time to make the 1935 estate rate increases fully operative, direct tax receipts bid well to dwarf collections from these miscellaneous sources. Furthermore, some of the more objectionable excise levies, as hereinafter indicated, are likely to be limited in scope if not wholly repealed. At all events the contrast drawn by Carl Shoup in 1934 /1/ to the effect that "from the revenue standpoint the Federal tax system in 1929-30 resembled that of England, whereas today it resembles that of one of the great indirect-taxing countries, France" is gradually losing its significance.
D. The Economics Of Excise Taxes
Accepted principles of taxation require that in so far as practicable and barring regulatory requirements or assessments for the benefit of special groups, a tax system be consistent with the ability to pay principle. The problem is readily resolved with respect to direct taxes. These are presumed to be borne by those on whom they are levied in the first instance and their burden is therefore distributable in accordance with predetermined standards of ability to pay. With respect to indirect taxes, however, the requirement is more complex and confusing. The tax is levied on a commodity, service or privilege. Where the incidence of that tax ultimately falls is not always clear or predictable.
In general, excise taxes involve an increase in the cost of production. Since the tax is an addition to the cost of producing the article, producers will seek to recompense themselves by corresponding price increases. Failing to do so, their profits will be curtailed and the production of the article will diminish. Some producers will remove their capital to untaxed industries. Production will be further curtailed by the elimination of the marginal producers. The imposition of the tax also has the effect of hindering the investment of new capital.
In general, it may be maintained that the shifting of the tax burden will be at a maximum in the case of those commodities for which there is a relatively inelastic demand, and the price of which is not set by monopolistic conditions. This broad category includes those commodities which are used by the vast majority of the people and by virtue of that circumstance are capable of producing the greatest amount of revenue. Since these are articles in common use, largely consumed by the lower income classes, most excise taxes are regressive in effect.
On the basis of a consideration of their incidence alone, it seems clear that excise taxes are less desirable than progressive direct taxes and, so far as possible, should be replaced by a system of direct taxes. The substitution of additional income taxation for excise tax revenue may be achieved by lowering exemptions, by increasing existing rates, or by both. The first of these would tend to place a burden upon those whose tax bill is now almost wholly confined to indirect taxes; the second would shift it from the low income group to those with higher incomes. Since, however, substantial lowering of exemptions to reach the smallest of incomes is not feasible or economically justifiable, it follows that, from a standpoint of incidence, the repeal of excise taxes cannot be counterbalanced merely by an increase in the income tax rates. Such an attempt will, of necessity, involve the shifting of the present tax burden from the shoulders of the poor to the middle classes and the well-to-do.
Presumably, if personal income taxes could be extended downward to reach lowest income groups, the principle of ability to pay could find satisfactory application. Practical considerations, however, conspire to render that goal unattainable. Some reductions in income tax exemptions could be effected, to be sure, but the process is not likely to be carried to a stage where it will extend the operation of the ability to pay principle to the lowest strata of the self-supporting population. In view of that fact, the abolition of all indirect taxes would be tantamount to the removal of all tax burden from the lowest income groups and, incidentally, some from the higher income groups insofar as they continue to consume previously taxed commodities. The latter is particularly significant during periods of depression when individuals in the so-called "higher income groups" enjoy no taxable income and are thus freed of income tax liability.
The indicated undesirability of excise tax elimination, together with its accompanying destructive effect upon revenue stability needs no demonstration. In consequence, excise taxes may be viewed as supplements to the income tax, designed in part to bolster depression revenue and supplant income taxes on the lower income groups. This procedure is not likely to lead to serious inequities. Consumption in the lower income groups is virtually identical with income. Barring investments in insurance policies, savings are practically nonexistent. Under such circumstances, a system of excise taxation wide in scope and fairly uniform in severity which aims to impose a burden proportional to the volume of consumption and by the same token proportional to the volume of income is desirable.
For these reasons there is no economic defense for eliminating excise taxes summarily, but rather there is justification for inquiring into each of them with a view to ascertaining their relative merits. In the light of the desirability of achieving a tax structure consistent with the ability theory, it seems advisable to first analyze the types of commodities which are taxed, according to the income levels of their users.
In general, as indicated in Carl Shoup's previously cited memorandum, excise taxes fall into four broad categories:
(1) Taxes on articles that are used almost exclusively by the wealthy (leases of boxes, dues, admissions to night clubs, etc.).
(2) Taxes on articles in use by the middle classes to a considerable degree as well as by the wealthy (admissions, cameras, refrigerators, etc.).
(3) Taxes on articles in general use by all classes save the very poorest (toilet articles, playing cards, etc.).
(4) Taxes on necessities used by all classes (matches, soap, etc.).
Because of its limited application, the first of these groups cannot yield very much revenue. From point of view of productivity, attention therefore must be directed toward the other three groups. On the other hand, considerations of equity point to selection on another basis and suggest that the articles segregated for taxation should include first, luxuries, and second, those commodities whose consumption it is desired to regulate. However, the elimination of all excises except those levied on the aforementioned two types of articles would involve the loss of the greatest part of the $581,000,000 revenue derived from manufacturers' excise, miscellaneous and stamp taxes during the calendar year 1936. Under present circumstances a procedure involving so great a loss of revenue is not deemed advisable. Instead piecemeal revision suggests itself.
The considerations governing such revision are several. Thus, in the case of any specific tax it is important to inquire into the administrative problems surrounding it. This is particularly true of excise taxes because of the number and diversity of commodities and services taxed. No categorical answer can be given as to whether they are administratively desirable. Some present practically no administrative problems. Such is the case with the tax on gasoline sales where 1,100 returns represent over 177 million dollars in revenue, or about $161,000 per return, with practically no evidence of evasion or avoidance. At the other extreme may be mentioned the tax on furs yielding a little over $3,000,000, paid by some 2,100 taxpayers, and causing constant investigation and litigation.
Cognizance must also be taken of the possible conflict of these Federal taxes with other Federal taxes and especially with various State and local taxes. Federal-State fiscal relations have reached a regrettable point of incoordination. During the past 25 years both the Federal tax system and those of the several States have evolved haphazardly without regard for one another. Friction with reference to the division of tax sources and governmental functions and with respect to the taxation of each other's instrumentalities have strained Federal-State fiscal relations. The contributions of recent Federal excise taxation in this connection are especially important, for, while the States are prepared to recognize that the integration of such important matters as income taxation and governmental functions is hard to resolve, they are less charitably inclined with respect to the recent Federal taxes on individual commodities which, they claim, react upon general and selected State sales taxes but have secondary revenue significance to the Federal Government.
Governmental requirements are usually in excess of available revenue. This is truer today than it has been ever before. The recent depression witnessed the expansion of many Government services begun during previous depressions and the initiation of an even greater quantity of new services. These bid fair to remain permanent features of the Federal budget. In view of that fact, there is little prospect for revenue abundance in the near future, and while the conclusion of Carl Shoup to the effect that
"In general, taxes discussed in this memorandum should be retained only in an emergency. Few, if any, of them are suitable for use as permanent elements in the fiscal system."
should be endorsed, that endorsement must be tempered by a recognition of the time element which may be involved in the passing of the "emergency." Pending the passage of that "emergency," a wholesale and immediate discarding of all excise taxes would be ill advised. Instead, present attention should be directed to piece-meal revision, to the elimination or modification of those taxes which are least desirable. In that manner inequity can be markedly reduced without a serious impairment of revenue.
Some attention should also be devoted to the possibility of imposing excise taxes upon commodities and services not now taxed with a view of either supplementing or supplanting present revenues.
To recapitulate, the selection of the various excises for retention or repeal must of necessity be governed by the five considerations heretofore discussed, namely, (1) productivity, (2) incidence, (3) ease of administration, (4) effect upon economic enterprise, and (5) effect upon other Federal and upon State and local taxes. Accordingly, in the following section each of these excise taxes are examined in the light of the above enumerated considerations.
The accompanying table presents the items taxed, together with the rates and yields for the fiscal year 1936, and estimated yields for the fiscal years 1937 and 1938.
For more detailed discussion of each of the taxes, see APPENDIX A, being "Reports of the Miscellaneous Tax Unit upon the History and Application of Various Miscellaneous Taxes" prepared by the Bureau of Internal Revenue at the request of the Division of Research and Statistics and submitted on November 5, 1936. There are contained therein detailed analyses of the statutory background, revenue yield, economic basis, conflict and administration of the several taxes. The studies are primarily factual, emphasizing the historical background of the respective taxes, their yields, the number of taxpayers concerned, methods of avoidance utilized and the administrative problems encountered. On the basis of these analyses, a series of recommendations were offered. These recommendations together with the Bureau's experience with these taxes were reconsidered in the light of the economic analyses in the present memorandum, the final findings being the conclusions cited on pages 27-30 below.
Attention is called to the order of the analysis. Where possible, taxes on similar commodities or services, e.g., automotive, admissions, documentary stamps, are treated together. In all other cases an attempt has been made to treat the individual taxes in the order of their appearance in the law.
E. Analysis of the Individual Taxes
1. The Automotive Group:
From the point of view of productivity, the most important group of excises are those imposed indirectly upon the operation and directly upon the manufacture, production, importation or sale of motor vehicles and automotive products. Eleven in number, the yield of these levies during 1936 ranged from $39,000 in the case of the tax imposed upon gasoline recovered from natural gas to $177,000,000 from the tax imposed on gasoline sales.
Federal Automotive Tax Collections Fiscal Year 1936
Amounts Taxes/1/ (In thousands of dollars) Gasoline, sales /2/ $177,340 Gasoline, recovered from natural gas /3/ 39 Total $177,379 /4/ Automobiles and motorcycles $48,201 Trucks, etc. 7,000 Automobile accessories, etc. 7,110 Tires and tubes 32,208 Total $94,519 Lubricating oil, sales/2/ $27,103 Total $27,103/5/ Crude petroleum, sales/3/ $564 Crude petroleum, processing or refining/3/ 561 Crude petroleum, etc., imports /2/ 7,165 Crude petroleum, transportation of, by pipe line/2/ 9,794 Total $18,087 Grand total $317,088 FOOTNOTES TO TABLE /1/ Unless otherwise noted the tax will lapse on July 31, 1939. /2/ Lapses on June 30, 1939. /3/ Continues until specifically repealed. /4/ Exclusive of tax on import of gasoline. /5/ Exclusive of tax on import of lubricating oil. END OF FOOTNOTES
Manufacturers' Excise, Miscellaneous and Documentary Stamp Taxes, Rates, Collections for the Fiscal Year 1936 and Estimated Collections for the Fiscal Years 1937 and 1938
MANUFACTURERS' EXCISE TAXES Tax Present rate of tax Gasoline 1 cents per gallon Automobile and motorcycle 3% of selling price Electrical energy 3% of selling price Tires and tubes 2 cents and 4 cents per pound, respectively Lubricating oil 4 cents per gallon Toilet preparations 5-10% of selling price according to type of product Mechanical refrigerators 5% of selling price Automobile parts or 2% of selling price accessories Automobile trucks 2% of selling price Matches 2 cents per M., 2 cents per M., 5 cents per M. Sporting goods 10% of selling price Radio sets, etc. 5% of selling price Articles made of fur 3% of selling price Firearms, shells, etc. 10% of selling price Brewers'' wort and malt 15 cents per gallon, 3 cents per syrup pound Chewing gum 2% of selling price Cameras and lenses 10% of selling price Subtotal Imports: Crude petroleum, etc. 1/2 cents per gallon Coal, coke, etc. 10 cents per 100 pounds Copper and copper con- 3% ad valorem or 3/4 cents per centrates, etc. pound, 3 cents per pound, 4 cents per pound Lumber $3 per M. feet Paraffin and other petroleum wax products 1 cents per pound Gasoline, lubricating 2 1/2 cents per gallon, 4 cents per oil gallon Subtotal Total Tax Yield fiscal years (000) 1936 1937 1938 (estimated) (estimated) Gasoline 7,340 195,000 204,000 Automobile and motorcycle 48,201 55,900 58,200 Electrical energy 33,575 35,500 36,400 Tires and tubes 32,208 36,200 27,000 Lubricating oil 27,103 31,500 33,300 Toilet preparations 13,320 15,000 19,900 Mechanical refrigerators 7,939 9,800 11,100 Automobile parts or 7,110 8,900 9,300 accessories Automobile trucks 7,000 8,100 8,100 Matches 6,886 7,000 7,200 Sporting goods 5,531 7,520 /1/ 8,050 /1/ Radio sets, etc. 5,075 7,000 7,800 Articles made of fur 3,321 6,000 7,000 Firearms, shells, etc. 2,495 3,000 /2/ 3,300 /2/ Brewers'' wort and malt 1,008 900 900 syrup Chewing gum 807 900 960 Cameras and lenses 578 - /1/ - /1/ Subtotal 379,479 428,320 448,510 Imports: Crude petroleum, etc. 7,168 Not available Not available Coal, coke, etc. 2,437 " " Copper and copper 2,105 " " concentrates, etc. Lumber 1,142 " " Paraffin and other 113 " " petroleum wax products Gasoline, lubricating Not available " " oil Subtotal 12,695 /3/ Total 392,444 /3/ 428,320 /4/ 448,510 /4/ MISCELLANEOUS TAXES Tax Present rate of tax Telephone, telegraph, radio, 10cents-20cents according to cable facilities, leased amount of charge, 5% of amount wires charged, 10 cents per message, 5% of amount charged Admissions Admissions to any place 1cents for every 10cents over40cents Excess admission charges 50% of excess made by proprietors Excess admission charges 10% of excess sold at places other than ticket office, etc. Leases of boxes in 10% of established price for theatres, etc. which similar seats or boxes are sold Admissions to roof 1 1/2cents for each 10cents gardens, etc. or fraction of admission charge First domestic processing 3 cents per pound /5/ of coconut oil, sesame oil, pals oil, pals kernel oil and sunflower oil Transportation of oil by 4% of transportation costs pipe line Club dues and initiation 10% of amount paid fees Use of safe deposit boxes 10% of amount charged Crude petroleum: Producers 1/25 of 1cents per barrel Refined or processed 1/25 of 1cents per barrel in United States Gasoline refined or 1/25 of 1 cents per barrel recovered from natural gas Firearms: Importers or manufacturers $500 per year Dealers $200 per year Pawnbrokers $300 per year Transfer of firearms $200 per year Imports of: Certain oils: Whale oil (except sperm 3 cents per pound oil), fish oil (except cod oil, cod liver oil and balibut liver oil), marine animal oil, or any combination of the foregoing, etc. Sunflower, repeseed, 4 1/2 cents per pound sesame, kapok, hempseed and perilla oils, etc. Empseed, perilla seed, 2 cents per pound rapeseed, kapol seed, sesame seed Pistols and revolvers 10% of selling price Total Tax Yield fiscal years (000) 1936 1937 1938 (estimated) (estimated) Telephone, telegraph, 21,098 24,000 25,400 radio cable facilities, leased wires Admissions Admissions to any 15,581) ) place Excess admission 15) ) charges made by proprietors Excess admission 117) ) charges sold at places other than ) 19,700) 20,800 ticket office, etc. Leases of boxes in 60) ) theatres, etc. Admissions to roof 1,339) ) gardens, etc. First domestic 27,691 /6/ 11,300 11,200 processing of coconut oil, sesame oil, pals oil, pals kernel oil and sunflower oil Transportation of 9,794 10,700 11,000 oil by pipe line Club dues and 6,091 6,700 7,400 initiation fees Use of safe deposit 1,997 2,000 2,000 boxes Crude petroleum: Producers 564) Refined or processed 561) in United States ) 1,000 1,000 Gasoline refined or 39) recovered from natural gas Firearms: Importers or 1 Not Not manufacturers available available Dealers 4 " " Pawnbrokers - /2/ " " Transfer of firearms 1 /2/ " " Imports of: Certain oils: Whale oil (except 809 " " sperm oil), fish oil (except cod oil, cod liver oil and balibut liver oil), marine animal oil, or any combination of the foregoing, etc. Sunflower, repeseed, Not " " sesame, kapok, available hempseed and perilla oils, etc. Empseed, perilla seed, " " rapeseed, kapol seed, sesame seed Pistols and revolvers 61 " " Total 85,822 /8/ 75,400 /9/ 8,800 /9/ DOCUMENTARY STAMP TAXES Tax Present rate of tax Transfer of capital stock 4 cents per $100 par or face value or fraction; or if without par or fave 4 cents per share. However, if selling price is $20 or over, whether with or without par of face value rate is 5 cents instead of 4 cents Issues of capital stock 10 cents per $100 face value or if without face value: (a) if actual value is less than $100, 2 cents on each $20 or fraction, (b) if actual value is over $100, 10 cents on each $100 or fraction Issues of bonds 10 cents per $100 face value or fraction thereof Transfer of bonds 4 cents $100 face value Deeds of conveyance Value: $100-$500, 50 cents, each additional $599 or fraction, 50 cents Sale of produce for future 3 cents per $100 or fraction delivery Playing cards 10 cents per pack containing not more than 54 cards Silver bullion sales or 50% of amount by which selling transfers price exceeds cost plus allowed expenses Passage tickets Costing $10-$30, $1 " $30-$60, $2 " more than $60, $5 Foreign insurance policies 3 cents per $1 or fraction of the premium charged Total Tax Yield fiscal years (000) 1936 1937 1938 (estimated) (estimated) Transfer of capital 33,055 34,600 38,400 stock Issues of capital 28,163 /10/ 34,000 /10/ 37,000 /10/ stock Issues of bonds Transfer of bonds Deeds of conveyance Sale of produce 2,344 4,000 3,000 for future delivery Playing cards 4,144 4,400 4,500 Silver bullion sales 685 600 175 or transfers Passage tickets - /11/ - /11/ - /11/ Foreign insurance - /11/ - /11/ - /11/ policies Total 68,991 77,600 83,075 Note: The following taxes are of a purely regulatory nature and will continue until repealed: Narcotics (Harrison Narcotic Law, as amended); adulterated butter (Act of May 9, 1902); process or renovated butter (Act of May 9, 1902); mixed flour (Act of June 13, 1898); filled cheese matches (Act of April 9, 1912); cotton futures (United States Cotton Futures Act, August 11, 1916); circulation of State bank notes (Sections 19 and 20, Act of February 8, 1875); firearms and machine gums (National Firearms Act, as amended). The total yield of these taxes for the fiscal year 1936 was $2,779,499, of which $2,203,804 was collected from the taxes on oleomargarine. FOOTNOTES TO TABLE /1/ Includes estimated collections on cameras and lenses because separate data are not available. /2/ Includes estimated collections on pistols and revolvers. /3/ Exclusive of collections on imports of gasoline and lubricating oil. /4/ Exclusive of estimated collections on import taxes. /5/ 5 cents per pound if coconut oil was not produced wholly in the Philippine Islands or any possession of the United States, or was not wholly from materials grown or produced in such possessions or was not imported before June 10, 1934, or was not purchased under a bona fide contract entered into prior to April 26, 1934, or was not produced from materials so produced. /6/ Includes $15,960,329 allocated to Philippine Islands trust fund account. /7/ Collections amounted to $200 for transfer of firearms and $300 from the special tax on pawnbrokers. /8/ Exclusive of collections on imports of sunflower, rapeseed, sesame, kapok, hempseed and perilla oils, etc. /9/ Exclusive of estimated collections on firearms and import taxes. /10 Includes collections on passage tickets and foreign insurance policies because separate data are not available. /11/ Note separately available. Source: Annual Report of the Commissioner of Internal Revenue for 1936 and The Budget of the United States Government for the fiscal year ending June 30, 1938. END OF FOOTNOTES
(1) Gasoline Sales: