Quotations about the Withholding Tax

Experience should teach us to be most on our guard to protect liberty when the government’s purposes are beneficial … the greatest dangers to liberty lurk in insidious encroachment by men of zeal, well meaning but without understanding. Supreme Court Justice Louis D. Brandeis, 1928.

What follows are quotations from a variety of famous people who both argued for tax visibility and/or disfavored the Withholding tax. What follows are quotations from President Franklin D. Roosevelt to President Dwight Eisenhower to David Brinkley to Milton Friedman.

* President Roosevelt on tax visibility – the Withholding tax is invisible
President Roosevelt argued against a sales tax on two grounds, lack of visibility (e.g. it is difficult to see how much you are really paying) and on the regressive nature of the tax. President Roosevelt was honest enough to believe that the public would pay the true cost of government programs even while being conscious of the true cost. Withholding hides the true cost just as Roosevelt feared the sales tax would. (Admittedly President Roosevelt did hide taxes in such things as alcohol and tobacco). Some also argue that the sales tax is quite visible. It is certainly more visible than a withheld income tax, but less visible than a non-withheld income tax. But the relevant point is that Democrats such as President Roosevelt favored tax visibility to Republicans. (See The Tax History Project, Joseph J. Thorndike, Apr. 21, 2005, “In fact, FDR used visibility to argue against sales taxation, insisting that income taxes were more straightforward.”).

* Presient Eisenhower:
“Eisenhower attacked Washington corruption, the Brannan Plan, and (somewhat surprisingly) the withholding tax—which, he said, fooled the people.” Time Magazine, October 27, 1952.

* David Brinkley, News commentator, Democrat:
“There began a brutal, bare-knuckled assault on the lives and property and privacy of the American people. The withholding tax poured in more money than Beardsley Ruml (former chairman of R.H. Macy and Co. and of the Federal Reserve Bank of New York) could ever have imagined, partly because government soon learned what automobile and real-estate salesmen already knew – if you talk to the customer about monthly payments, never mentioning the total price, it is much easier to sell a car or a house. In tax collections, the term `take-home pay’ entered the language, and soon it was clear the government could take in far more without serious complaint if it deducted the money before the taxpayer ever saw it. If the immense sums being collected had to be handed over in one lump sum, surely there would have been a revolt. The withholding tax allowed government to keep the rates high, [Congress] held on to it, an artesian well spouting cash, computers to count it and disburse it, an automatic, power-driven money machine never seen before and a true wonder of the world. With all this money theirs to spend, congressmen could buy votes and build post offices and roads and bridges and reelect themselves almost interminably. They did. (Nov 10, 1996)

* Mises.org
“The withholding tax makes it possible for the government to silently steal the wealth from its citizens with little or no outrage about the loss. And even in the case where the citizen receives a refund of all the taxes he has paid in, the withholding tax still serves two evil purposes.”

* Internal Revenue Service/IRS
Amazingly “One of the major opponents of the idea was the IRS” according to former employees of the Treasury Department at the time, including Milton Friedman. See Reason Magazine, June 1995.

* Milton Friedman
“I think [withholding is] a great mistake for peacetime, but in 1941-43, all of us were concentrating on the war. I have no apologies for it, but I really wish we hadn’t found it necessary and I wish there were some way of abolishing withholding now.” And “[I]ts existence has had some negative effects in the postwar period.”

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