American Economic Association Report on the Organization and Activities of the Joint Committee on Statistics of Income Source: The American Economic Review, Vol. 23, No. 1, Supplement, Papers and Proceedings of the Forty-fifth Annual Meeting of the American Economic Association (Mar., 1933), pp. 191-193 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/66 . Accessed: 23/04/2014 11:36 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . American Economic Association is collaborating with JSTOR to digitize, preserve and extend access to The American Economic Review. http://www.jstor.org This content downloaded from 95.31.43.252 on Wed, 23 Apr 2014 11:36:01 AM All use subject to JSTOR Terms and Conditions
Transcript
American Economic Association
Report on the Organization and Activities of the Joint Committee on Statistics of IncomeSource: The American Economic Review, Vol. 23, No. 1, Supplement, Papers and Proceedingsof the Forty-fifth Annual Meeting of the American Economic Association (Mar., 1933), pp.191-193Published by: American Economic AssociationStable URL: http://www.jstor.org/stable/66 .
Accessed: 23/04/2014 11:36
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp
.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].
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REPORT ON THE ORGANIZATION AND ACTIVITIES OF THE JOINT COMMITTEE ON STATISTICS OF INCOME
Early in the year the three interested associations appointed a delegate to the Joint Committee on the Statistics of Income as follows: the American Association of University Instructors in Accounting, Professor James L. Dohr (Columbia), Professor Howard C. Greer (Chicago), and Professor William A. Paton (Michigan); the American Economic Association, Pro- fessor J. Franklin Ebersole (Harvard), Professor Ralph C. Epstein (Buffa- lo), and Professor Robert Murray Haig (Columbia); and the American Statistical Association, Professor William L. Crum (Harvard), Professor Willford I. King (New York University), and Dr. Simon S. Kuznets (Na- tional Bureau of Economic Research).
The Joint Committee met in New York on June 1, 1932, elected Dr. King its chairman, adopted certain general principles to guide its study of the problem assigned to it, discussed at some length certain of the more sig- nificant specific criticisms and suggestions relating to the federal income tax statistics, and established a subcommittee empowered to consider the mass of suggestions submitted. This subcommitte'e (Ebersole, Epstein, Kuz- nets, and the chairman) met immediately in New York, and prepared a pre- liminary summary and report as a basis for further consideration, by cor- respondence and otherwise.
During the summer, consideration of this preliminary summary, and of various specific suggestions which were submitted by or on belhalf of the different members of the Joint Committee, proceeded by mail. The members of the subcommittee (to which, by consent, Crum had been added) exam- ined in detail the various proposals, and exchanged communications concern- ing the major points of interest. The preliminary summary, with subsequient notations and addenda, was thus made ready for consideration at the No- vember meeting of the Joint Committee. The Joint Committee held a sec- ond meetinog in New York on November 18, adopted the preliminary sum- mary as the basis of discussion, and after amending this summary extensively and in detail, adopted the recommendations presented below-a draft of wlhich was ordered made by Crum, from elaborate minutes submitted to him by the chairman.
Early in our work, it appeared desirable to adopt certain general aims to guide our investigation and to insure the organization of our program of changes along lines which could be defended in the event of their sub- mission to government officials for action. These general aims can be sum- marized briefly as follows:
The Bureau of Internal Revenue now collects and publishes certain data on the annual flow of incomes, corporation incomes and expenditures, and balance sheet items. The existing information can be used to build an annual picture of the flow of purchasing power to individuals (above a certain income range), and of changes in the business activity and financial struc- ture of most American corporations. But the existing tabulations omit many possible classifications and combinations of the data, which would be as
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important as, or perhaps more important than, the present tabulations as a means of throwing light upon fundamental economic processes. We are fully aware that the primary purpose of the income tax return is to facilitate administration of the tax, and we are not in favor of overloading the tax blank with questions which are important only to economists and statisticians. But we do believe it is important to secure information, the proper study of which will enable legislative bodies and all interested citizens to under- stand and appraise the income tax from the point of view of its impact upon the total flow of income in the nation. The wisdom of future tax policy will depend considerably upon the degree of our knowledge of the basic facts which presumably will be brought to light by some of the proposed changes. The sweep of governmental interest in economic and business mat- ters is now so wide that the information is likely to be revealed by every item of the proposed changes and will be of large usefulness in guiding legis- lative policies. In fact very few changes are being recommended in the tax blank. This is partly because the bulk of the information which now seems desirable to be added to that already published can readily be com- piled from the returns as they are now filed, and partly to avoid at this time recommendations which would entail extensive administrative acts and adjustments. Only the most pressing changes which involve alterations in the tax blank are suggested at this time.
It seemed wise to work out the specific recommendations in great detail; and, although it has been necessary to present many of them to the associa- tions only in such form as makes evident the principle involved, it is as- sumed that great care will be exercised to complete the detail and render each recommendation tangible and definite before its final submission to Washington authorities. In order to pave the way for this part of the work, the recommendations have been developed with reference to the tax blank now in use, and with reference to Statistics of Income as now published (1929 edition).
The Committee has constantly in mind the necessity of setting up its rec- ommendations with due regard for the dictates of governmental economy. Fortunately, it has been able to make many recommendations looking to the elimination of work now being done; and it is quite likely that the final set of detailed recommendations to which this report may lead will secure a net reduction in the size of Statistics of Income and in the work and cost of preparing it, except in certain years when supplementary surveys are made.
In reference to this last point, it should be noted that certain of the present and proposed tabulations are such that there is no need of having them every year. It is accordingly being recommended that many tabulations be made only at intervals of three to five years, and it is believed that this practice would bring a large saving in labor and cost, without greatly im- pairing the significance and usefulness of the data.
A technical device which would save an important amount of space in the publications and cost in their preparation is the adoption of larger units for stating the results in many tables; the use of hundreds or thousands
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where dollars are now used in numerous cases, and the use of millions where thousands are now used, would secure important economies without reducing the usefulnes of the data. The aim to have the various tables "check" to the nearest dollar is of such slight importance in tabulations of this kind that the extra cost involved cannot possibly be justified.
With these general aims and considerations in view, the Committee has sought to make a series of recommendations which would result in obtaining a clear picture of changes in individual and corporate incomes in the United States, the distribution of such income by industrial and occupational groups, the changes in the financial position of the corporations of the country, and the impact of the income tax upon various economic groups without burden- ing unduly the taxpayer in making out his return or the Bureau of Internal Revenue in compiling and publishing the information based upon the re- turns. It is believed that the recommendations that are now being proposed will involve only slight changes in the tax blank, and might result-except once in three to five years-in an actual reduction in the size and cost of Statistics of Income. No close estimate on this last point can be made until the recommendations are worked out in greater detail.
The Joint Committee makes the following recommendations to each of the three associations represented:
1. That the Association approve in principle the specific recommendations listed below.
2. That the Association authorize the appointment of a delegation to a new Joint Committee, having power to: (a) fill in technical details of pres- ent recommendations; (b) establish and maintain contact, presumably through an agent, with federal officers, with a view to securing their co- operation in obtaining adoption of the proposed changes; (c) continue the investigations of the present Joint Committee, in order to work out further recommendations as needed.
3. That the Association authorize the Joint Committee to select such an agent as implied under 2(b) above, and provide a moderate appropriation for salary and traveling expenses of such an agent, or empower the Joint Committee to seek such an appropriation on the Association's behalf from other sources.
Respectfully submitted, J. F. EnBERSOLE RALPH C. EPSTEIN MURRAY HAIG
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