Will Congress Pass a War Tax in 2015?

With all the heated debates about our skyrocketing debt and ballooning deficit — not to mention, all the rampant fraud in our government social programs — how can the U.S. afford another war? Will we use PAYGO — and pay as we go into war?

With some people complaining that America is going broke, while at the same time, those very same people are saying large corporations and the very wealthy are being taxed to death — how will another war in the Middle East be paid for if Congress wants to send ground troops to fight ISIS?

If not by raising taxes on those who are the most able to pay, will Congress want offsetting cuts elsewhere in the budget? Would they cut funding of federal disaster relief to Red States — or drastically reduce farm and oil subsidies? Or maybe our political leaders will repatriate trillions of untaxed corporate profits overseas to fund a new war. If not, how can America afford another war?

Before Democratic President Jimmy Carter cut taxes for the rich, the capital gains tax was near 40%. But under Bush (after already going to war in the Middle East) the capital gains tax rate was reduced to 15%, which had never been that low since the Great Depression.

During President George W. Bush's tenor in office, it was the first time ever (in all of U.S. history) did America engage in a major war without ever raising taxes. Just the opposite was true — instead, taxes were drastically reduced.

Wealthy patriots such as Robert Morris help fund the American Revolution. According to U.S. History.Org: "In late 1776, with the Continental Army in a state of severe deprivation because of a shortage of capital and the failure of several of the colonies in paying for the war, Morris loaned $10,000 of his own money to the government [over $270,000 in today's dollars]. Morris completed his office as Senator and then retired from public service. He never recovered the wealth that he enjoyed before the revolution. He died in 1806 in relative poverty at the age of 73."

The War of 1812 was financed mainly through the use of borrowed funds. But faced with declining revenues and the massive cost of the War, Secretary of the Treasury Gallatin was forced to reintroduce the Federalist taxes he had previously denounced. By funding the war deficit with bond issues, he helped defray the costs.

The United States went to war with Mexico in 1846 over the annexation of Texas and California. Congress authorized the issuing of additional debt to meet these obligations. It is this concept that would later become the basis for the Savings Bond program.

Just prior to the Gilded Age, the Revenue Act of 1862 was passed by Congress to help fund the Civil War. The Act was signed into law by President Abraham Lincoln, introducing the first progressive income tax rate to the country.

The entry of the United States into World War I greatly increased the need for revenue. The Revenue Act of 1916 and War Revenue Act of 1917 increased the top bracket on income above $2 million — and the tax rate was raised from 15% to 67%. The Act also instituted the federal estate tax (that the Republicans now call a "death tax") and an excess profits tax.

In 1917 and 1918, the United States government also issued Liberty Bonds to raise money, which contributed $21.5 billion for the war effort. The majority of sales were not to individuals, but to banks and financial groups that ignored the patriotic appeal and bought the bonds principally as an investment opportunity. The majority of Americans were simply uncomfortable converting a significant portion of their savings into what was, for them, a new and uncertain form of investment.

The Revenue Act of 1918 hiked the top rate to 77% on income above $1,000,000. Even then, only 5% of the population paid federal income taxes (up from 1% in 1913); but yet the income tax funded one-third of the cost of World War I. But these taxes had never impeded the top one percent's accumulation of vast wealth during the first Gilded Age — or during the Roaring Twenties.

During the Nazi reign in 1940, the U.S. Treasury proposed marketing the previously successful baby bonds as "defense bonds". For those that found it difficult to purchase an entire bond at once, 10 cent savings stamps could be purchased and collected in Treasury-approved stamp albums, until the recipient had accumulated enough stamps for a bond purchase. The name of the bonds was eventually changed to War Bonds after the Japanese attack on Pearl Harbor.

The crisis of World War II also led Congress and FDR to pass four excess profits tax statutes between 1940 and 1943. Eventually the excess profits tax was replaced with a flat 90% tax rate. And all told, 85 million Americans also purchased war bonds over the course of the war, raising approximately $185.7 billion. But even then, there was still war profiteering. (GM actually got repatriated by the taxpayers for their factories lost in Nazi Germany — which was their first government bailout.)

Several years later the Korean War induced Congress to re-impose an excess profits tax, effective from July 1950 to December 1953. The tax rate was 30% of excess profits, with the top corporate tax rate rising to 47%.

In 1968, a 10% surtax was imposed to pay for the Vietnam War. As Bruce Bartlett wrote at Forbes: "And there was conscription ... which can be viewed as a kind of tax that was largely paid by the poor and middle-class [while] young men from wealthy families largely escaped its effects through college deferments." One presidential candidate went on a religious deferment to France while protesting FOR that war — while other well-know politicians (who were against the war) had also received deferments during that period.

Then there was Bush and Iraq and Afghanistan. Now there is Obama and Iraq (again) and Syria, Libya, Pakistan and Yemen — and who knows where else.

But if the Republicans and Fox News want another war to fight ISIS, is it going to be paid for by raising taxes on low-income working-class Americans; and by cutting the bare essentials that the very poor rely on — such as food stamps, TANF and Social Security?

Or will Congress pass a war tax (or an excessive profits tax) on those with incomes above $1 million a year to help pay for another war? (They can call it The 2015 War Revenue Tax Act). Or will the top one-percent put down their American Express cards and pick up an M-16 rifle to fly half-way around the world to die and/or kill our enemies?

And how will our returning wounded warriors later be cared for? By taxing the poor and cutting food stamps again? Will the very rich be patriotic, or will only the poor and working-class (again) be the only patriotic Americans in the next war?

Ironic, isn't it? Our Vets and their families (part of Mitt Romney's 47%) are taxed so that they can sacrifice, suffer and fight — and/or become disabled or die in our wars. But the one's who escape paying for the wars can always profit from them — and without sacrificing anything at all.

The poor and lower-class (and what's left of the middle-class) can't afford any more wars. As it is already, they can't afford the class-war that's already being waged against them today, right here at home. And maybe that's why some Americans are now joining ISIS — because we're also losing the war on poverty.

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Comments

The War Revenue Tax Act of 2015

The Republican-controlled Congress needs to pass a war tax to, not only fund another new war, but also to put our young people into college — or to train them in other skills — and to also hire them for good-paying jobs for government infrastructure projects — like FDR did during the Dust Bowl and Great Depression.

War Tax

An excellent history...too bad you spoil the whole thing by putting down the Republicans and following the Commie/Liberal party line.