October 3, 1917 – War Tax Law Pictured – Nothing is certain but…

October 3, 1917 – War Tax Law

Pictured – Nothing is certain but death and taxes.

The US was at war, but it was not in the war. Despite the popularity of the Preparedness movement in the last years calling for a stronger military in case of war in Europe, the American army was still totally unready for war. It had greatly increased in size since Mexico with the draft, but its training left much to be desired. On October 2 General Pershing in France exploded at a practice demonstration of a trench attack that betrayed complete incompetence. Pershing wrote to Newton Baker, the Secretary of War, explaining that the American Expeditionary Force had a long way to go.

Fortunately for Pershing, the government had plans about that. On October 3 Congress passed the War Revenue act, massively hiking up income taxes. Beforehand only a percentile of the American population paid income tax. Now someone making 40,000 a year paid 15%, while someone making 1.5 million a year paid 67% to the government. The Revenue Act increased federal tax revenue from $809 million in 1917 to $3.6 billion the next year.