Withholding taxes from paychecks began JUNE 9, 1943.
It was an emergency measure by Congress during World War II to get money to fight Hitler.
It was the idea of Beardsley Ruml, the treasurer of Macy's Department
Store who became chairman of New York's Federal Reserve Bank.
Ruml was helped by Bernard Baruch and Milton Friedman.
The Federal Government would forgive people not paying their annual
lump sum taxes at the end of 1941 if they signed up to have future taxes
withheld from each paycheck.
It was called the "Pay-As-You-Go" tax.
It was part of the patriotic war enthusiasm which included slogans such as:
"UNCLE SAME 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 continued after the war.
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.
Jefferson noted in his 2nd Annual Message, 1802:
"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."
Andrew Jackson told Congress, May 27, 1830:
"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."
Jackson stated December 5, 1836:
"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."
Jackson stated in his Farewell Address, 1837:
"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."
Get the book, The Interesting History of Income Tax
Prior
to 1913, other than during the Civil War, the Federal Government was
financed 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."
Get the book, American Minute - Notable Events of American Significance Remembered on the Date They Occurred
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