The Endlessness of a Temporary Tax
Governments regularly claim that they favour tax reform. When this claim has been repeated so many times that virtually no one believes them anymore, they announce a tax reform, to show that they really mean it. They then reshuffle the existing taxes to give the appearance that taxation will actually be lowered.
When it becomes apparent that the reform is a sham, they often pull a rabbit out of a hat in the form of a “temporary” tax, that’s pre-legislated to end sometime in the future.
Sounds promising.
So, let’s have a look at one such temporary tax and see how things worked out.
The US government introduced the War Revenue Act of 1898—a tax on telephone use—under the claim that it was necessary to pay for the Spanish American War.
In what way does telephone use pertain to a government invading another country? Well, actually, one has nothing to do with the other. But, let’s leave that discussion for another day and see how this temporary tax played out.
The Act was repealed in 1902 but was reinstated, this time as the Emergency Internal Revenue Tax Act of 1914. The justification then given was that another war was on the way and increased taxation to pay for it couldn’t begin too soon. Telephone users needed to cough up.
It was decided by both parties to increase the tax on telephones and the War Revenue Act of 1917 was created. It hadn’t passed the debate stage until the war was over, but they decided that they’d implement it anyway, as the work had already been done. In the bargain, they introduced not
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LewRockwell.com is a libertarian website that publishes articles, essays, and blog posts advocating for minimal government, free markets, and individual liberty. The site was founded by Lew Rockwell, an American libertarian political commentator, activist, and former congressional staffer. The website often features content that is critical of mainstream politics, state intervention, and foreign policy, among other topics. It is a platform frequently used to disseminate Austrian economics, a school of economic thought that is popular among some libertarians.
