Pres. Kennedy's of the Union speeches: on Tax Reform

Apply withholding requirements to dividends & interest

I am submitting for fiscal 1963 a balanced Federal Budget. This is a joint responsibility, requiring Congressional cooperation on three sources of income in particular:

1. An increase in postal rates, to end the postal deficit;
2. Passage of the tax reforms previously urged, to remove unwarranted tax preferences, and to apply to dividends and to interest the same withholding requirements we have long applied to wages; and
3. Extension of the present excise and corporation tax rates, except for those changes affecting transportation.

Obsolete tax system drags on private employment

To achieve these greater gains, one step, above all, is essential-- the enactment this year of a substantial reduction and revision in Federal income taxes. For it is increasingly clear that our obsolete tax system exerts too heavy a drag on private purchasing power, profits, and employment. Designed to check inflation in earlier years, it now checks growth instead.

I shall propose a permanent reduction in tax rates which will lower liabilities by $13.5 billion. Of this, $11 billion results from reducing individual tax rates, which now range between 20% and 91%, to a more sensible range of 14% to 65%. $2.5 billion results from reducing corporate tax rates, from 52%--which gives the Government today a majority interest in profits-to the permanent pre-Korean level of 47%.