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| Long title | An Act to increase revenues, to limit expenditures and new obligational authority, and for other purposes. |
|---|---|
| Enacted by | the 90th United States Congress |
| Effective | June 28, 1968 |
| Citations | |
| Public law | 90-364 |
| Statutes at Large | 82 Stat. 251 |
| Codification | |
| Titles amended | 26 U.S.C.: Internal Revenue Code |
| U.S.C. sections amended | I.R.C. ch. 1 §§ 101-110, 201-205, 301-303 |
| Legislative history | |
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The Revenue and Expenditure Control Act of 1968 is a United States law that created a temporary 10 percent income tax surcharge for both individuals and corporations through June 30, 1969, to help pay for the Vietnam War. It also delayed a scheduled reduction in the telephone and automobile excise tax, causing them to end in 1973 instead of 1969. President Lyndon Johnson signed the legislation into law on June 28, 1968.
Though the act imposed a 10 percent surcharge overall, Johnson noted its limited effects on some, saying just before signing the bill, "A family of four earning less than $5,000 ($42,077 in 2022 dollars) would pay nothing additional. A family making $10,000 ($84,153 in 2022 dollars) would pay just $2 ($17 in 2022 dollars) extra per week".[1] The law took into effect for corporations on January 1, 1968, and for individuals on April 1, 1968, with the surcharge ending on July 1, 1969.[2]
As a result of the tax, the federal government had a budget surplus in 1969, which would be its last until 1998.[3] The tax has been the third largest one-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The automobile excise tax was repealed in 1971 in the Revenue Act of 1971 and the Federal telephone excise tax was continued until 2006.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.
