Revenue and Expenditure Control Act of 1968

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Revenue and Expenditure Control Act of 1968
Great Seal of the United States
Long titleAn Act to increase revenues, to limit expenditures and new obligational authority, and for other purposes.
Enacted bythe 90th United States Congress
EffectiveJune 28, 1968
Citations
Public law90-364
Statutes at Large82 Stat. 251
Codification
Titles amended26 U.S.C.: Internal Revenue Code
U.S.C. sections amendedI.R.C. ch. 1 §§ 101-110, 201-205, 301-303
Legislative history
  • Introduced in the House as H.R. 15414
  • Passed the Senate on April 2, 1968 (57-31)
  • Passed the House on June 20, 1968 (257-162)
  • Reported by the joint conference committee on June 20, 1968; agreed to by the House on June 20, 1968 (268-150) and by the Senate on June 21, 1968 (64-16)
  • Signed into law by President Lyndon Johnson on June 28, 1968

The United States Revenue and Expenditure Control Act of 1968 created a temporary 10 percent income tax surcharge on both individuals and corporations through June 30, 1969 to help pay for the Vietnam War. It also delayed the scheduled reduction in the telephone and automobile excise tax, causing them to end in 1973 instead of 1969. It was signed into law by President Lyndon Johnson on June 28, 1968.

Though overall creating a 10 percent surcharge, as Johnson stated just before signing the bill, "A family of four earning less than $5,000 (about $35,000 in 2019 dollars) would pay nothing additional. A family making $10,000 (about $69,000 in 2019 dollars) would pay just $2 (about $13.85 in 2019 dollars) extra per week".[1] It took into effect for corporations on January 1, 1968 and for individuals on April 1, 1968, being effective until July 1, 1969.[2]

As a result of the tax, the Federal Government had a budget surplus in 1969 which would be the last until 1998.[3] The tax has been the third largest 1-year revenue increase adjusted for inflation and the largest as a percent of the GDP since 1968, which is quite impressive for a surcharge that people don't often even know about.[4] The US economy showed slowdown starting in 1968. Quarterly, the GDP Growth gradually slowed from 8.4% in Q1 of 1968 to -1.9% in Q4 1969.[5] Annually, the GDP Growth slowed from 4.8% in 1968 to 0.2% in 1970.[6] The tax, however, visibly did nearly nothing to help in the Vietnam War as the US pulled out of the war in 1973 and South Vietnam officially lost in 1975.

The automobile excise tax was repealed in 1971 in the Revenue Act of 1971 and the Federal telephone excise tax was continued until 2006. The act no longer has any legacy or stigma on the United States as everything contained in the bill has no effect on the current US Tax Law.

Legislative history[edit]

Final House of Representatives vote, June 20, 1968[7]
Vote by Party Yea Nay Not Voting
Republicans 114 61% 73 39% 0
Democrats 153 66% 77 34% 14
Total 267 64% 150 36% 14
Final Senate vote, April 2, 1968[8]
Vote by Party Yea Nay Not Voting
Republicans 31 94% 2 6% 3
Democrats 33 70% 14 30% 16
Total 64 80% 16 20% 19

References[edit]