The Revenue Act of 1936

The President requested additional permanent revenue of $620,000,000 and temporary revenue of $517,000,000. To secure the permanent revenue he suggested the substitution of a tax on undistributed earnings of corporations for the net income, excess profits, and capital stock taxes. To obtain the temporary revenue he suggested a "windfall" tax on processors and an excise tax on the processing of certain commodities. The House passed a measure to raise the permanent revenue, much as the President suggested. It provided a windfall tax but not new processing taxes. The Senate retained the corporation income tax, levied a 7 per cent rate on undistributed earnings and increased the surtax on individuals. The finally approved measure was a compromise containing a graduated tax on corporation net income, a graduated tax on undistributed earnings, excess-profits, capital-stock, and windfall taxes. Corporation dividends paid to individuals were made subject to the normal individual income tax.