The Revenue Act of 1936, (June 22, 1936), established an "undistributed profits tax" on corporations in the United States .
It was signed into law by President Franklin D. Roosevelt.
The act was applicable to incomes for 1936 and thereafter. Roosevelt sought 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. Individual rates were raised only on the very rich (that is, income over $5 million a year.). [1]
A Normal Tax was levied on the net income of corporations as shown in the following table.
| Revenue Act of 1936 Tax on Corporations [2] | |||
| Net Income (dollars) | Rate (percent) | ||
| 0 | 8 | ||
| 2,000 | 11 | ||
| 15,000 | 13 | ||
| 40,000 | 15 | ||
A Surtax was levied on corporations on "undistributed profits", i.e. profits not paid out in dividends, as shown in the following table.
| Revenue Act of 1936 Surtax on Undistributed Profits | |||
| Application (percent of undistributed net income) | Surtax Rate (percent) | ||
| up to 10 | 7 | ||
| from 10 to 20 | 12 | ||
| from 20 to 40 | 17 | ||
| from 40 to 60 | 22 | ||
| over 60 | 27 | ||
A normal tax and a surtax were levied against the net income of individuals as shown in the following table.
| Revenue Act of 1936 Normal Tax and Surtax on Individuals | ||||
| Net Income (dollars) | Normal Rate (percent) | Surtax Rate (percent) | Combined Rate (percent) | |
| 0 | 4 | 0 | 4 | |
| 4,000 | 4 | 4 | 8 | |
| 6,000 | 4 | 5 | 9 | |
| 8,000 | 4 | 6 | 10 | |
| 10,000 | 4 | 7 | 11 | |
| 12,000 | 4 | 8 | 12 | |
| 14,000 | 4 | 9 | 13 | |
| 16,000 | 4 | 11 | 15 | |
| 18,000 | 4 | 13 | 17 | |
| 20,000 | 4 | 15 | 19 | |
| 22,000 | 4 | 17 | 21 | |
| 26,000 | 4 | 19 | 23 | |
| 32,000 | 4 | 21 | 25 | |
| 38,000 | 4 | 24 | 28 | |
| 44,000 | 4 | 27 | 31 | |
| 50,000 | 4 | 31 | 35 | |
| 56,000 | 4 | 35 | 39 | |
| 58,000 | 4 | 35 | 39 | |
| 62,000 | 4 | 39 | 43 | |
| 68,000 | 4 | 43 | 47 | |
| 74,000 | 4 | 47 | 51 | |
| 80,000 | 4 | 51 | 55 | |
| 90,000 | 4 | 55 | 59 | |
| 100,000 | 4 | 58 | 62 | |
| 150,000 | 4 | 60 | 64 | |
| 200,000 | 4 | 62 | 66 | |
| 250,000 | 4 | 64 | 68 | |
| 300,000 | 4 | 66 | 70 | |
| 400,000 | 4 | 68 | 72 | |
| 500,000 | 4 | 70 | 74 | |
| 750,000 | 4 | 72 | 76 | |
| 1,000,000 | 4 | 73 | 77 | |
| 2,000,000 | 4 | 74 | 78 | |
| 5,000,000 | 4 | 75 | 79 | |