Written by Hope Callister
Frederic Bastiat wrote, “Which countries contain the most peaceful, the most moral, and the happiest people? Those people are found in countries where the law least interferes with private affairs.” This means that countries are the best off having governments “which [govern] the least” and allow people to control their own property (Thoreau). This was something many of the Founding Fathers stood for, having much experience in having a government have too much control in private affairs, but America’s views began to progressively differ overtime. An example of this is income tax. Because of the Revenue Act of 1942, which was created under Franklin D. Roosevelt to fund World War II, the federal government restricted citizens’ freedom to fully control their income, a tax that continued after the war.
A precedent for the Revenue Act of 1942 was the institution of an income tax during the Civil War. On July 1, 1862, President Lincoln signed a revenue act in order to help in fund the war. At this point in America’s history, this was the first time this type of tax was decreed. This tax was abolished shortly after the war ended and was not re-introduced until 1913 (“History”). Fortunately for those with lower paying jobs, this tax only affected the top money makers at the time. However, the idea of an income tax did not come about in 1862. Income tax was first addressed in Congress when trying to fund the War of 1812, but was quickly shut down, as many considered the war to be “Madison’s war.” Thomas Jefferson once said, “The same prudence which in private life would forbid our paying our own money for unexplained projects, forbids it in the dispensation of the public monies” (“The Founding”). All these events set the groundwork for the eventual permanent enactment of an income tax.
While an income tax seemed necessary to fund World War II, the continuation of the tax after the war restricted the people’s freedom to use money they earned as they chose. As the U.S. was mobilizing its economy to fund itself through World War II, Congress passed the Revenue Act of 1942 under President Franklin D. Roosevelt increasing the number of people who paid income tax from thirteen to fifty million (“How”). Benjamin Franklin once said, “It would be a hard government that should tax its people one-tenth part of their income” (“The Founding”). Taxes reached peaked at 94 percent for those with an income of over $2.5 million in today’s money while still having high rates for those in lower tax brackets. This restricted the people from investing their income as they desired. Instead, the government used this money to invest in industries that would benefit the U.S. in the war. Unfortunately, it was not a priority to entirely repeal this tax after the war, although the tax was no longer a necessity. Time called it “the biggest piece of machinery ever designed to separate dollars from citizens” (Rothman). Having gained a degree of control over the money in people’s pockets, the government avoided fully giving up this power. This act restricted citizens from having full control of the assets they had worked for.
Based off the views the Founding Fathers had on taxes, they would have been horrified by the extreme taxes rates Roosevelt imposed on the American people at the time. Jefferson once said, “This is the tendency of all human governments… the fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression” (“The Founding”). He is speaking of America’s rocky past with its mother country, Great Britain, in the matter of taxes. Although the Founders understood how difficult it is to fund a war when the people are not taxed, they also had experience in being overtaxed. Considering that the taxes imposed on the colonies was a listed grievance written by Jefferson in the eventual call for independence, the Founders would have been astounded by the massive tax placed on Americans during World War II, seeing it as oppressive and tyrannical. They would have found other solutions to funding the war because they understood that the government should not be the answer to everything in a federal democratic republic. They were able to get through the Revolutionary War with hardly any money coming from the people having done all that they could without restricting the people’s rights. Their belief of having as much power left to the people as possible contradict Roosevelt’s actions considering what the Founders penned about taxation, it is clear that they would have wholeheartedly disagreed with FDR’s income tax, seeing it as extreme and oppressive.
Altogether, it is clear that the income tax placed on Americans during World War II led to the expansion of federal power and the restriction of individual freedom. How can America truly have a capitalist economy where people are motivated to work hard because they know it is the only way to achieve success and fulfill the American Dream, if such an excessive portion of their hard work is taken away? It is as John Adams said, “if tyranny and oppression come to this land, it will be in the guise of fighting a foreign enemy.” It is understandable for a government to take more control during a time of war, but it would be wise for America to keep its government in check with this added power and to be sure that their leaders return it. Otherwise, the power remains, as seen today, while citizens continue to pay income tax that was meant to fund a war.