Opinion

The Great Debate

IRS at 100: How income taxation built the middle class

Exactly a century ago, on October 3, 1913, President Woodrow Wilson signed the first modern federal income tax into law. The sky did not fall.

That may have surprised the eminences of the American plutocracy. For years they had predicted the most dire of consequences should the federal government begin taxing the incomes of America’s most comfortable.

Those warnings took a shriller turn in 1909. A flurry of cynical congressional maneuvers sent the states a constitutional amendment, ostensibly designed to allow a federal income tax. Conservatives in Congress felt confident that the amendment had no chance of gaining enough state support to be ratified. To clinch the amendment’s defeat, they unleashed a fierce rhetorical fusillade.

Friends of grand fortune would reserve a special venom for the notion of “progressive” taxation — the idea that high incomes should face the highest tax rates. They characterized a “graduated” tax on the incomes of America’s affluent as “extortion,” a “penalty upon ability and intelligence” and an imposition on a “small class of people powerless to defend itself.” Taxing the wealthy, they contended, would be “killing the goose that laid the golden egg.”

In the Virginia House of Delegates, Speaker Richard Byrd predicted that an income tax would put freedom itself in jeopardy. Any new income tax law, Byrd charged, “will of necessity have inquisitorial features.”

Palmer Raids Redux: NSA v civil liberties

President Barack Obama speaks about the National Security Agency’s secret collection of telephone records from millions of Americans, June 7, 2013.REUTERS/Kevin Lamarque

During the “Red Scare” that swept the United States in the wake of Russia’s 1917 Bolshevik revolution, the Justice Department launched a cycle of raids against radicals and leftists. The U.S. attorney general, a once-celebrated Progressive leader named A. Mitchell Palmer, gave his name to this unfolding series of attacks against civil liberities.

Though initially supported by Congress, the courts and the press, the 1919 Palmer raids revealed a darker side of the American psyche. They eventually provoked a national backlash, which inspired the formation of the American Civil Liberties Union; led to stirring free speech dissenting opinions from Supreme Court Justices Oliver Wendell Holmes Jr. and Louis Brandeis, and ignited a political counter-movement determined to prevent similar civil liberties abuses in the future.

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