[PREV]


FOOTNOTE TO TABLE

/1/ Assuming rates as under the 1941 Act and such division of personal exemption of $1,500 as will minimize total tax.

END OF FOOTNOTE

18. Effect of the mandatory joint returns provision on community property vs. non-community property returns, under different assumptions respecting definition and treatment of earned income and earned net income.

California vs. New York, husband in each State earning $10,000 and wife having $3,000 separate income from dividends.

                           (continued -3)

                         Comment on results

UNDER ASSUMPTION 1
  More equal division of income in California reduces tax despite
  smaller earned income credit.

UNDER ASSUMPTION 3
  Larger earned income credit in New York reduces normal tax $12.

UNDER ASSUMPTION 4
  Only $10,000 of income being earned in California, Treasury
  relief is less.

UNDER ASSUMPTION 5
  California husband and wife each have earned income of $5,000
  for earned income credit, but wife has only $3,000 (combined 
  $8,000) for relief provision. New York not affected.

UNDER ASSUMPTION 6
  California husband has $5,000 earned income, wife $3,000 earned
  net income; their normal tax is $8 higher, Treasury relief same 
  as in 5.

UNDER ASSUMPTION 7
  New York gets no relief because wife has no "earned" net income,
  except for earned income credit; tax therefore same as in 3.
  California husband and wife each have $5,000 earned income, and
  therefore get same relief as in 4.

UNDER ASSUMPTION 8
  New York pays $12 higher normal tax and gets no relief, wife
  having no earned net income. California not affected.

UNDER ASSUMPTION 9
  State gets relief, because wife has no earned net income.
  (California husband has $5,000 earned; New York husband $10,000).

UNDER ASSUMPTION 10
  Neither State gets relief; normal tax is increased by $20 for 
  California and $12 for New York.

          Table 1. Number of joint and of separate returns
         (including community property returns), 1913 - 1939

                            Joint
                          returns of
          Taxable          husbands
           year              and
                           wives /1/
______________________________________
          1913 /4/         272,153 /5/
          1914             278,821 /5/
          1915             261,334 /5/
          1916             355,107 /6/
          1917           1,450,723
          1918           2,559,057
          1919           2,858,597
          1920           3,775,261

          1921           3,447,592
          1922           3,566,302
          1923           4,505,729
          1924           3,991,551
          1925           2,074,849
          1926           2,017,182
          1927           2,016,850
          1928           1,976,954
          1929           1,973,864
          1930           1,864,229

          1931           1,646,523
          1932           1,921,105
          1933           1,850,863
          1934           2,034,946
          1935           2,100,026
          1936           2,392,833
          1937           2,782,822
          1938           2,866,026
          1939           3,323,698

                     Separate returns of husband and wives,
                    including community property returns /2/
  Taxable
   year         Husbands /1/      Wives      Community      Total
                                             property      reported
___________________________________________________________________

   1913 /4/                       6,682
   1914                           3,985
   1915                           4,819
   1916                           7,635
   1917                          20,530
   1918                          35,942
   1919                          58,534
   1920                          77,558       40,115

   1921                          89,634       24,094
   1922                         101,319       27,540
   1923                         170,573       35,557
   1924                         173,225       18,960
   1925                         120,358       19,578
   1926                         113,550       42,388
   1927                         112,719       24,282
   1928                         124,208       40,917
   1929                         116,265       42,789
   1930                         104,325       34,747

   1931                          88,238 /7/   24,345
   1932                          83,005       15,092
   1933                          79,530       15,970
   1934                          87,471       23,790
   1935          124,355        105,559       31,148        261,062
   1936          150,364        136,211       49,311        335,886
   1937          158,981        158,302       54,231        371,514
   1938          152,654        153,143       45,417        351,214
   1939          184,765        180,802       50,690        416,257

                                               Total
                           All other           number
          Taxable          returns           of returns
           year            with net           with net
                          income /3/         income /3/
_______________________________________________________

          1913 /4/          78,763             357,598
          1914              74,709             357,515
          1915              70,499             336,652
          1916              74,294             437,036
          1917             360,879           1,832,132
          1918           1,830,115           4,425,114
          1919           2,415,629           5,332,760
          1920           3,367,010           7,259,944

          1921           3,070,856           6,662,176
          1922           3,092,320           6,787,481
          1923           2,986,462           7,698,321
          1924           3,186,052           7,369,788
          1925           1,956,266           4,171,051
          1926           1,964,972           4,138,092
          1927           1,947,696           4,101,547
          1928           1,928,772           4,070,851
          1929           1,911,409           4,044,327
          1930           1,704,208           3,707,509

          1931           1,466,818 /7/       3,225,924
          1932           1,858,228           3,877,430
          1933           1,777,195           3,723,558
          1934           1,948,213           4,094,420
          1935           2,213,924           4,575,012
          1936           2,684,780           5,413,499
          1937           3,195,812           6,350,148
          1938           2,933,536 /8/       6,150,776 /8/
          1939           3,830,365 /8/       7,570,320 /8/

Source and footnotes: See page 2.

Source: ANNUAL REPORT OF THE COMMISSIONER OF INTERNAL REVENUE
1914-16, and STATISTICS OF INCOME (Part 1) 1916-39.

FOOTNOTES TO TABLE

/1/ Separate returns of husbands are included with joint returns 1913-34. "Joint" returns also include in all years returns of either husband or wife when only one or the other files a return.

/2/ Community property returns (first classified as such beginning 1920) exclude returns with net income under $5,000 or with combined net income under $10,000. These excluded returns are classified as separate or as joint according to the status indicated on the return.

/3/ Including returns for estates and trusts, 1913-37.

/4/ Returns for 1913 relate only to the last 10 months of that year.

/5/ Published figures for "married" individuals are revised above to exclude separate returns of wives.

/6/ Including returns of single persons, heads of families.

/7/ As revised in STATISTICS OF INCOME for 1932, page 7.

/8/ Not including returns for estates and trusts.

END OF FOOTNOTES TO TABLE

   Table 4. Tax under a joint return and under separate returns of
    husband and wife, with combined net income of specified size
                       variously divided. /1/

                  Married person -- No dependents

            Combined net income          Under joint
                                           return
____________________________________________________
                $   3,000                       138
                    5,000                       375
                   10,000                     1,305
                   20,000                     4,614
                   50,000                    20,439
                  100,000                    52,704
                  250,000                   157,659
                  500,000                   345,084
                1,000,000                   732,554
                5,000,000                 3,922,524

                             Combined tax under separate returns    
                            Percent division of combined net
 Combined net income         income between husband and wife

                         90              80              70
                         10              20              30
______________________________________________________________

   $    3,000              138             138             138
        5,000              360             345             330
       10,000            1,175           1,065           1,005
       20,000            4,011           3,528           3,185
       50,000           18,109          16,329          15,198
      100,000           47,599          44,498          42,883
      250,000          147,493         143,486         141,648
      500,000          328,408         322,823         319,823
    1,000,000          708,278         699,778         694,293
    5,000,000        3,868,748       3,856,248       3,851,248

                             Combined tax under separate returns
                              Percent division of combined net
     Combined net income     income between husband and wife

                                 60              50
                                 40              50
_______________________________________________________________

        $    3,000                 138             138
             5,000                 330             330
            10,000                 965             965
            20,000               3,005           2,985
            50,000              14,583          14,448
           100,000              42,013          41,763
           250,000             140,913         140,913
           500,000             317,353         316,383
         1,000,000             692,293         691,308
         5,000,000           3,846,248       3,846,248

Treasury Department, Division of Tax Research    December 13, 1941

FOOTNOTE

/1/ 1941 Act; maximum earned income credit assumed; and for community property returns equal division of personal exemption of $1,500 as will minimize the combined tax.

END OF FOOTNOTE

        Table 5A. Separate returns of husbands and wives /1/
     classified by size of their combined net incomes, 1935 /2/

                  Combined              Total
                 net income             number
                 classes /2/              of
                                        cases
______________________________________________
                   Under  $  2,000      1,947
         $  2,000    "       3,000      4,233
            3,000    "       4,000      7,108
            4,000    "       5,000      7,447
            5,000    "       6,000      7,676
            6,000    "       7,000      8,528
            7,000    "       8,000     10,263
            8,000    "       9,000      9,605
            9,000    "      10,000      8,378

           10,000    "      15,000     25,436
           15,000    "      20,000     14,821
           20,000    "      25,000      8,335
           25,000    "      50,000     17,378
           50,000    "     100,000      7,220
          100,000    "     500,000      2,891
          500,000 and over /4/            125

                  Total               141,391

                               Percent classes of net income
                               of one spouse to combined net
           Combined             incomes of both spouses /2/
          net income          ______________________________
          classes /2/                         10        20
                                   Under     under     under
                                    10        20        30
____________________________________________________________
                                        NUMBER OF CASES

            Under  $  2,000            -       328       280
  $  2,000    "       3,000            -       721         -
     3,000    "       4,000          791         -     1,008
     4,000    "       5,000          709       865       643
     5,000    "       6,000        1,027       734       995
     6,000    "       7,000          778     1,552     1,321
     7,000    "       8,000          826     1,660     1,527
     8,000    "       9,000        1,409       678     1,371
     9,000    "      10,000        1,244     1,063     1,006

    10,000    "      15,000        4,979     3,657     2,938
    15,000    "      20,000        3,619     1,857     1,507
    20,000    "      25,000        2,117     1,462     1,313
    25,000    "      50,000        4,488     3,315     2,056
    50,000    "     100,000        1,698     1,530     1,031
   100,000    "     500,000          748       509       422
   500,000 and over /4/               38        20        28

           Total                  24,471    19,951    17,446

                               Percent classes of net income
                               of one spouse to combined net
           Combined             incomes of both spouses /2/
          net income          ________________________________
          classes /2/               30        40
                                   Under     under      50 /3/
                                    40        50
______________________________________________________________

                                        NUMBER OF CASES

            Under  $  2,000            -         -     1,339
  $  2,000    "       3,000        1,310         -     2,202
     3,000    "       4,000        1,095     1,759     2,455
     4,000    "       5,000        1,627     1,052     2,551
     5,000    "       6,000        1,097     1,248     2,575
     6,000    "       7,000          852     1,021     3,004
     7,000    "       8,000        1,175     1,089     3,986
     8,000    "       9,000        1,178     1,374     3,595
     9,000    "      10,000          455     1,625     2,985

    10,000    "      15,000        3,304     2,741     7,817
    15,000    "      20,000        1,587     1,550     4,701
    20,000    "      25,000          767     1,191     1,485
    25,000    "      50,000        2,473     1,392     3,654
    50,000    "     100,000        1,108       654     1,199
   100,000    "     500,000          413       414       385
   500,000 and over /4/               23         6        10

           Total                  18,464    17,116    43,943

Treasury Department, Division of Tax Research August 23, 1941

Source: Compiled from Statistics of Income Supplement for 1936, Section II.

Note: Footnotes follow 5B.

         Table 5B. Percent distribution of separate returns
           of husbands and wives /1/ classified by size of
                their combined net incomes, 1936 /2/
                  Combined              Total
                 net income             number
                 classes /2/              of
                                        cases
______________________________________________
                   Under  $  2,000      1,947
         $  2,000    "       3,000      4,233
            3,000    "       4,000      7,108
            4,000    "       5,000      7,447
            5,000    "       6,000      7,676
            6,000    "       7,000      8,528
            7,000    "       8,000     10,263
            8,000    "       9,000      9,605
            9,000    "      10,000      8,378

           10,000    "      15,000     25,436
           15,000    "      20,000     14,821
           20,000    "      25,000      8,335
           25,000    "      50,000     17,378
           50,000    "     100,000      7,220
          100,000    "     500,000      2,891
          500,000 and over /4/            125

                  Total               141,391

                               Percent classes of net income
                               of one spouse to combined net
           Combined             incomes of both spouses /2/
          net income   _______________________________________
          classes /2/     Total                 10        20
                                     Under     under     under
                                      10        20        30
______________________________________________________________

                                    PERCENT DISTRIBUTION

         Under $  2,000   100.0          -     16.8      14.4
$  2,000   "      3,000   100.0          -     17.0         -
   3,000   "      4,000   100.0       11.1        -      14.2
   4,000   "      5,000   100.0        9.5     11.6       8.6
   5,000   "      6,000   100.0       13.4      9.6      13.0
   6,000   "      7,000   100.0        9.1     18.2      15.5
   7,000   "      8,000   100.0        8.0     16.2      14.9
   8,000   "      9,000   100.0       14.7      7.0      14.3
   9,000   "     10,000   100.0       14.9     12.7      12.0

  10,000   "     15,000   100.0       19.6     14.4      11.5
  15,000   "     20,000   100.0       24.4     12.5      10.2
  20,000   "     25,000   100.0       25.4     17.5      15.8
  25,000   "     50,000   100.0       25.8     19.1      11.9
  50,000   "    100,000   100.0       23.5     21.2      14.3
 100,000   "    500,000   100.0       25.9     17.6      14.6
 500,000 and over /4/     100.0       30.4     16.0      22.4

           Total          100.0       17.3     14.1      12.3

                               Percent classes of net income
                               of one spouse to combined net
           Combined             incomes of both spouses /2/
          net income    ______________________________________
          classes /2/               30        40
                                   Under     under      50 /3/
                                    40        50
______________________________________________________________

                                     PERCENT DISTRIBUTION

            Under  $  2,000            -         -      68.8
  $  2,000    "       3,000         31.0         -      52.0
     3,000    "       4,000         15.4      24.8      34.5
     4,000    "       5,000         21.9      14.1      34.3
     5,000    "       6,000         14.3      16.2      33.5
     6,000    "       7,000         10.0      12.0      35.2
     7,000    "       8,000         11.5      10.6      38.8
     8,000    "       9,000         12.3      14.3      37.4
     9,000    "      10,000          5.4      19.4      35.6

    10,000    "      15,000         13.0      10.8      30.7
    15,000    "      20,000         10.7      10.5      31.7
    20,000    "      25,000          9.2      14.3      17.8
    25,000    "      50,000         14.2       8.0      21.0
    50,000    "     100,000         15.3       9.1      16.6
   100,000    "     500,000         14.3      14.3      13.3
   500,000 and over /4/             18.4       4.8       8.0

           Total                    13.1      12.1      31.1
Treasury Department, Division of Tax Research   August 23, 1941