Rep. David Obey, the Democratic majordomo of the House Appropriations Committee, is proposing an income-tax hike, something that Democrats are congenitally disposed to do, with one familiar condition — it’s only on the “wealthy” (wink, wink) — and one slightly less common condition — it’s presented as a dedicated surtax to fund the war in Afghanistan. The politics of the move are vulgar and obvious (The rich can afford it! Why don’t you support the war? Taxes are patriotic!), but there’s a bit of history with temporary emergency war taxes on the rich that ought to make Americans wary: They are not temporary, they outlive their emergencies, and they end up punishing Americans who are far from rich. (Not that even the rich need to be taxed any more than they already are.)
The most irksome example of such a tax is the 3 percent levy Americans pay on telephone services, which they also paid on long-distance charges until 2006. That tax was a temporary emergency levy on the rich adopted in 1898 to pay for the Spanish-American War. At the time, a telephone was a very high-end item — something that only businesses and the wealthy might have. The Spanish-American War lasted four months (We won! Cuba libre!), but the tax is now into its second century. And the only reason it was partly repealed in 2006 is that Uncle Sam lost a lawsuit challenging its collection as illegal (on baroquely complicated technical grounds having to do with changes in the way long-distance bills are collected). In 2009, when people of very modest means own iPhones, nobody would think that the mere possession of an old Bakelite rotary landline set qualifies a family as belonging to the gentry, but many of the poorest Americans still pay this tax for the luxury of access to 911 services and the occasional chat with Grandma. Damn the Monroe Doctrine.
At its height, the phone tax was, relatively considered, only a nuisance, good for few tens of billions of dollars a year in Washington’s coffers. The big money-suck is that other emergency wartime levy on the rich: the income tax. Those of you who are not recent graduates of a government-run high school will recall that there was some 19th-century unpleasantness between the states, which got totally out of hand after that lamentable episode at Fort Sumter, known to American historians as the Civil War. On Aug. 5, 1861 — talk about a day that will live in infamy! — the United States adopted its first income tax. Thankfully, the United States had a Republican president at the time, Abraham Lincoln, so the taxpayers got off relatively easily, with a 3 percent flat tax on income above $800, equal to about $18,000 a year in scandalously depreciated 2008 dollars. The statute was admirably comprehensive and straightforward in its language, demanding that the tax be “levied, collected, and paid, upon the annual income of every person residing in the United States, whether such income is derived from any kind of property, or from any profession, trade, employment, or vocation carried on in the United States
or elsewhere, or from any other source whatever.” No mortgage-interest deductions or pantywaist progressive brackets for these Republicans! They were pretty hardcore — think about it: The United States was in the midst of its worst crisis ever, the only real, imminent existential threat the nation ever had faced, and the worst we got was a 3 percent flat tax. (Where are those
Republicans when we need them?)