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American Minute with Bill Federer
June 9 - Withholding from your paycheck began |
 Withholding
taxes from people's paychecks began JUNE 9, 1943. It was passed by
Congress as an emergency measure to get money to fight Hitler during
World War II.
The idea was developed in 1942 mainly from
Beardsley Ruml, treasurer of Macy's department store and chairman of New
York's Federal Reserve Bank, with help from Bernard Baruch and Milton
Friedman.
Called
the "Pay-As-You-God" tax, the Federal Government forgave people for not
paying their annual lump sum taxes at the end of 1941 if they signed up
to have all future taxes withheld from each paycheck.
It was
part of the patriotic war enthusiasm which included slogans such as:
"Uncle Sam Needs You," "Buy War Bonds," and "Smash the Axis-Pay your
Taxes."
So much money came in from the "Pay-As-You-Go" tax, with so few complaints, that it was continued even after the war ended.
John F. Kennedy told Congress, April 20, 1961:
"Introduced
during the war when the income tax was extended to millions of new
taxpayers, the wage-withholding system has been one of the most
important and successful advances in our tax system in recent times.
Initial difficulties were quickly overcome, and the new system helped the taxpayer no less than the tax collector."
But Americans were not always so taxed. In his 2nd Annual Message, 1802, Thomas Jefferson wrote:
"We
are able, without a direct tax, without internal taxes, and without
borrowing, to make large and effectual payments toward the discharge of
our public debt and the emancipation of our posterity from that mortal
canker...
It is an encouragement, fellow-citizens, of the highest
order to proceed as we have begun in substituting economy for
taxation."
President Andrew Jackson stated in his 8th Annual Message, December 5, 1836:
"There
is no such provision as would authorize Congress to collect together
the property of the country, under the name of revenue, for the purpose
of dividing it equally or unequally among the States or the people.
Indeed, it is not probable that such an idea ever occurred to the States when they adopted the Constitution."
In his Message to Congress, May 27, 1830, Andrew Jackson said:
"Through
the favor of an overruling and indulgent Providence our country is
blessed with general prosperity and our citizens exempted from the
pressure of taxation, which other less favored portions of the human
family are obliged to bear."
In Eighth Annual Message, December 5, 1836, President Andrew Jackson stated:
"No
people can hope to perpetuate their liberties who long acquiesce in a
policy which taxes them for objects not necessary to the legitimate and
real wants of their Government...
The practical effect of such an
attempt must ever be to burden the people with taxes, not for the
purposes beneficial to them, but to swell the profits of deposit banks
and support a band of useless public officers...
There would soon be but one taxing power, and that vested in a body of men far removed from the people...
The States...would not dare to murmur at the proceedings of the General Government, lest they should lose their supplies;
all
would be merged in a practical consolidation, cemented by widespread
corruption, which could only be eradicated by one of those bloody
revolutions which occasionally overthrow the despotic systems of the Old
World."
In his 1837 Farewell Address, President Jackson stated:
"There is, perhaps, no one power conferred on the Federal Government so liable to abuse as the taxing power...
Plain
as these principles appear to be, you will yet find there is a constant
effort to induce the General Government to go beyond the limits of its
taxing power and to impose unnecessary burdens upon the people...to
fasten upon the people this unjust and unequal system."
Prior to
1913, other than a few years during the Civil War, the Federal
Government was financed, not by income taxes, but primarily from tariff
taxes on imports, called imposts.
President Franklin Pierce stated in his First Annual Message to Congress, December 5, 1853:
"Happily, I have no occasion to suggest any radical changes in the financial policy of the Government.
Ours
is almost, if not absolutely, the solitary power of Christendom having a
surplus revenue drawn immediately from imposts on commerce." |
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