Kennedy proposed the bill on the advice of Keynesian economist Walter Heller, who believed that temporary deficit spending would boost economic growth. The act was initially blocked by democrats like Senator Harry F. Byrd, but Lyndon Johnson was able to guide it through Congress after the assassination of Kennedy in November 1963. The act cut federal income taxes by approximately twenty percent across the board, and the top federal income tax rate fell from 91 percent to 70 percent. The act also reduced the corporate tax from 52 percent to 48 percent and created a minimum standard deduction.
The Office of Tax Analysis of the United States Department of the Treasury summarized the tax changes as follows:[1]
reduced top marginal rate (on income over $100,000, roughly $848,000 in 2021 dollars, for individuals; and over $180,000; roughly $1,527,000 in 2021 dollars, for heads of households) from 91% to 70%
reduced corporate tax rate from 52% to 48%
phased-in acceleration of corporate estimated tax payments (through 1970)
created minimum standard deduction of $300 + $100/exemption (total $1,000 max)
The President addressed the issue of tax reform before the Economic Club of New York at the Waldorf-Astoria Hotel in New York City on December 14, 1962.[5] On the advice of Walter Heller, the Chairman of the Council of Economic Advisers, President John F. Kennedy proposed a tax cut designed to help spur economic growth.[6] Kennedy believed that the tax cut would stimulate consumer demand, which in turn would lead to higher economic growth, lower unemployment, and increased federal revenues.[7] Kennedy's support for a tax cut reflected his conversion to Keynesian economics, which favored temporary deficit spending in order to boost economic growth.[8] In January 1963, Kennedy presented Congress with a tax proposal that would reduce the top marginal tax rate from 91 percent to 65 percent, and lower the corporate tax rate from 52 percent to 47 percent; in total, the cut was projected to decrease income taxes by about $10 billion and corporate taxes by about $3.5 billion. The plan also included reforms designed to reduce the impact of itemized deductions, as well as provisions to help the elderly and handicapped.[9] Conservatives revolted at giving Kennedy a key legislative victory before the election of 1964 and blocked the bill in Congress.[10]
Lyndon B. Johnson succeeded Kennedy as president after the latter was assassinated in November 1963. After Johnson agreed to decrease the total federal budget to under $100 billion, powerful conservative Senator Harry F. Byrd dropped his opposition to a tax cut, clearing the way for its passage as the Revenue Act of 1964.[11] Johnson signed the bill into law on February 26, 1964.[12] Passage of the long-stalled tax cut facilitated efforts to move ahead on the Civil Rights Act of 1964.[13]
Impact
The stated goals of the tax cuts were to raise personal incomes, increase consumption, and increase capital investments. Evidence shows that these goals were exceeded by large degree with the combination of tax cuts and domestic spending programs President Johnson advocated, such as Medicare.[14] Unemployment fell from 5.2% in 1964 to 4.5% in 1965, and fell to 3.8% in 1966.[14][15] Initial estimates predicted a loss of revenue as a result of the tax cuts, however, tax revenue increased in 1964 and 1965.[14][16]
References
^Office of Tax Analysis (2003). "Revenue Effects of Major Tax Bills" (PDF). United States Department of the Treasury. Working Paper 81, page 12. Retrieved 6 December 2010.
^"Federal Income Tax Brackets for Tax Year 1962 (Filed April 1963)".
^"Federal Income Tax Brackets for Tax Year 1963 (Filed April 1964)".
^"Federal Income Tax Brackets for Tax Year 1964 (Filed April 1965)".
^Gerhard Peters and John T. Woolley (December 14, 1962). "John F. Kennedy: Address and Question and Answer Period at the Economic Club of New York". The American Presidency Project. Retrieved December 29, 2020.
^ abcDolan, Chris; Frendreis, John.; Tatalovich, Raymond (2008). The Presidency and Economic Policy. Rowman & Littlefield. pp. 172–176. ISBN978-0-7425-4729-2.
^"Unemployment Rates for Years 1948-2009". United States Bureau of Labor Statistics. Retrieved 6 December 2010.
^FY 2011 Budget of the United States Government: Historic Tables. 2010. pp. 21–22. ISBN978-0-16-084797-4.
Works cited
Bernstein, Irving (1996). Guns or Butter: The Presidency of Lyndon Johnson. Oxford University Press. ISBN978-0195063127.
Dallek, Robert (1998). Flawed Giant: Lyndon Johnson and His Times, 1961–1973. Oxford University Press. ISBN978-0-19-513238-0.
Giglio, James N. (2006). The Presidency of John F. Kennedy (2nd ed.). University Press of Kansas.
revenue, 1964, united, states, also, known, reduction, proposed, president, john, kennedy, passed, 88th, united, states, congress, signed, into, president, lyndon, johnson, became, february, 1964, kennedy, proposed, bill, advice, keynesian, economist, walter, . The United States Revenue Act of 1964 Pub L 88 272 also known as the Tax Reduction Act was a tax cut act proposed by President John F Kennedy passed by the 88th United States Congress and signed into law by President Lyndon B Johnson The act became law on February 26 1964 Kennedy proposed the bill on the advice of Keynesian economist Walter Heller who believed that temporary deficit spending would boost economic growth The act was initially blocked by democrats like Senator Harry F Byrd but Lyndon Johnson was able to guide it through Congress after the assassination of Kennedy in November 1963 The act cut federal income taxes by approximately twenty percent across the board and the top federal income tax rate fell from 91 percent to 70 percent The act also reduced the corporate tax from 52 percent to 48 percent and created a minimum standard deduction Contents 1 Summary of provisions 2 Passage 3 Impact 4 References 4 1 Works cited 5 External linksSummary of provisions EditThe Office of Tax Analysis of the United States Department of the Treasury summarized the tax changes as follows 1 reduced top marginal rate on income over 100 000 roughly 848 000 in 2021 dollars for individuals and over 180 000 roughly 1 527 000 in 2021 dollars for heads of households from 91 to 70 reduced corporate tax rate from 52 to 48 phased in acceleration of corporate estimated tax payments through 1970 created minimum standard deduction of 300 100 exemption total 1 000 max Revenue Act of 1964Income Brackets Income Tax Rates in 1963 2 Income Tax Rates in 1964 3 Income Tax Rates in 1965 4 up to 500 00 20 16 14 500 01 1 000 00 20 16 5 15 1 000 01 1 500 00 20 17 5 16 1 500 01 2 000 00 20 18 17 2 000 01 4 000 00 22 20 19 4 000 01 6 000 00 26 23 5 22 6 000 01 8 000 00 30 27 25 8 000 01 10 000 00 34 30 5 28 10000 01 12 000 00 38 34 32 12 000 01 14 000 00 43 37 5 36 14 000 01 16 000 00 47 41 39 16 000 01 18 000 00 50 44 5 42 18 000 01 20 000 00 53 47 5 45 20 000 01 22 000 00 56 50 5 48 22 000 01 26 000 00 59 53 5 50 26 000 01 32 000 00 62 56 53 32000 01 38 000 00 65 58 5 55 38 000 01 44 000 00 69 61 58 44 000 01 50 000 00 72 63 5 60 50000 01 60 000 00 75 66 62 60 000 01 70 000 00 78 68 5 64 70 000 01 80 000 00 81 71 66 80 000 01 90 000 00 84 73 5 68 90 000 01 100 000 00 87 75 69 100 000 01 150 000 00 89 76 5 70 150 000 01 200 000 00 90 76 5 70 200 000 01 or more 91 77 70 Passage EditThe President addressed the issue of tax reform before the Economic Club of New York at the Waldorf Astoria Hotel in New York City on December 14 1962 5 On the advice of Walter Heller the Chairman of the Council of Economic Advisers President John F Kennedy proposed a tax cut designed to help spur economic growth 6 Kennedy believed that the tax cut would stimulate consumer demand which in turn would lead to higher economic growth lower unemployment and increased federal revenues 7 Kennedy s support for a tax cut reflected his conversion to Keynesian economics which favored temporary deficit spending in order to boost economic growth 8 In January 1963 Kennedy presented Congress with a tax proposal that would reduce the top marginal tax rate from 91 percent to 65 percent and lower the corporate tax rate from 52 percent to 47 percent in total the cut was projected to decrease income taxes by about 10 billion and corporate taxes by about 3 5 billion The plan also included reforms designed to reduce the impact of itemized deductions as well as provisions to help the elderly and handicapped 9 Conservatives revolted at giving Kennedy a key legislative victory before the election of 1964 and blocked the bill in Congress 10 Lyndon B Johnson succeeded Kennedy as president after the latter was assassinated in November 1963 After Johnson agreed to decrease the total federal budget to under 100 billion powerful conservative Senator Harry F Byrd dropped his opposition to a tax cut clearing the way for its passage as the Revenue Act of 1964 11 Johnson signed the bill into law on February 26 1964 12 Passage of the long stalled tax cut facilitated efforts to move ahead on the Civil Rights Act of 1964 13 Impact EditThe stated goals of the tax cuts were to raise personal incomes increase consumption and increase capital investments Evidence shows that these goals were exceeded by large degree with the combination of tax cuts and domestic spending programs President Johnson advocated such as Medicare 14 Unemployment fell from 5 2 in 1964 to 4 5 in 1965 and fell to 3 8 in 1966 14 15 Initial estimates predicted a loss of revenue as a result of the tax cuts however tax revenue increased in 1964 and 1965 14 16 References Edit Office of Tax Analysis 2003 Revenue Effects of Major Tax Bills PDF United States Department of the Treasury Working Paper 81 page 12 Retrieved 6 December 2010 Federal Income Tax Brackets for Tax Year 1962 Filed April 1963 Federal Income Tax Brackets for Tax Year 1963 Filed April 1964 Federal Income Tax Brackets for Tax Year 1964 Filed April 1965 Gerhard Peters and John T Woolley December 14 1962 John F Kennedy Address and Question and Answer Period at the Economic Club of New York The American Presidency Project Retrieved December 29 2020 Patterson 1996 pp 464 465 Giglio 2006 p 125 Giglio 2006 pp 136 137 Giglio 2006 pp 139 141 Ippolito Dennis 2004 Why Budgets Matter Budget Policy and American Politics Penn State Press pp 173 175 ISBN 0 271 02260 4 Bernstein 1996 pp 29 33 Bernstein 1996 pp 37 38 Dallek 1998 pp 73 74 a b c Dolan Chris Frendreis John Tatalovich Raymond 2008 The Presidency and Economic Policy Rowman amp Littlefield pp 172 176 ISBN 978 0 7425 4729 2 Unemployment Rates for Years 1948 2009 United States Bureau of Labor Statistics Retrieved 6 December 2010 FY 2011 Budget of the United States Government Historic Tables 2010 pp 21 22 ISBN 978 0 16 084797 4 Works cited Edit Bernstein Irving 1996 Guns or Butter The Presidency of Lyndon Johnson Oxford University Press ISBN 978 0195063127 Dallek Robert 1998 Flawed Giant Lyndon Johnson and His Times 1961 1973 Oxford University Press ISBN 978 0 19 513238 0 Giglio James N 2006 The Presidency of John F Kennedy 2nd ed University Press of Kansas Patterson James 1996 Grand Expectations The United States 19451974 Oxford University Press ISBN 978 0195117974 External links EditFull text of the Act This United States federal legislation article is a stub You can help Wikipedia by expanding it vte Retrieved from https en wikipedia org w index php title Revenue Act of 1964 amp oldid 1154744527, wikipedia, wiki, book, books, library,
