delanceyplace.com 11/17/10 - short-haired women and long-haired men

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In today's excerpt - taxes reached all-time highs during World War II, and the spirit of sacrifice for a great cause made that politically possible. But after the war, some politicians were eager to rescind those taxes and the ageless tax war between Republicans and Democrats was rejoined with the usual insults and acrimony. Then came the Korean War:

"After World War II, a bipartisan consensus had quickly emerged that the government no longer needed the high  level of revenues it had required to sustain the war effort. As after World War I, Congress repealed the excess profits tax as well as a number of excise taxes and lowered the levy on personal income.

"Republicans, who had won control of Congress in 1946 on a platform promising tax cuts, proceeded with fervor to deliver on their promises, in part to stimulate the economy, in part to reward their wealthy supporters, and in part to deprive Truman of the funds to carry out his ambitious Fair Deal social reforms. Robert Lee Doughton's Republican successor as chairman of the Ways and Means Committee, Harold Knutson of Minnesota, explained their perspective: 'For years we Republicans have been warning that short-haired women and long-haired men of alien minds in the administrative branch of government were trying to wreck the American way of life and install a hybrid oligarchy at Washington through confiscatory taxation.' Now, Knutson believed, it was the Republicans' chance to end the 'oligarchy' and proposed legislation to do so.

"However, the Republican bill ran into stiff resistance from the White House. Truman vetoed it on grounds that the tax cuts would increase the deficit, add to inflationary pressures, and provide disproportionate benefits to the  wealthy. 'The time for tax reduction,' the president asserted, 'will come when inflationary pressures have ceased.'  The motion to override narrowly failed in the House.

"New tax legislation, drafted in early 1948, found broader support, including among Democrats. It provided greater benefits to lower-income Americans than did Knutson's 1947 proposal, reducing individual taxes, increasing the  personal exemption from $500 to $600, permitting married couples to split their income for tax purposes, and providing benefits for individuals over sixty-five years of age. Truman vetoed that bill, too, but was overridden—the second time in U.S. history this had occurred on a revenue bill "Truman's surprise victory over New York's governor, Thomas Dewey, in the 1948 election was accompanied by a  return of Democratic majorities to the House and Senate. Yet this did not guarantee smooth sailing for the president  with Capitol Hill on tax issues. No major tax legislation was passed in 1949, and in 1950 the president was concerned  about insufficient revenues. In his January 1950 State of the Union address, he asked for higher taxes, reporting that 'more than 70 percent of the government's expenditures are required to meet the costs of past wars and to work for peace.'

"At the same time, he noted, the government had to 'make substantial expenditures which are necessary to the growth and expansion of the domestic economy.' He lamented that 'largely because of the ill-considered tax reduction of the 80th Congress [the Republican Congress that had overridden his veto] the Government is not receiving enough revenue to meet its necessary expenditures.' To address the shortfall, he announced that the administration intended to hold down spending and submit legislation that would 'yield a moderate amount of  additional revenue.' During the summer of 1950, Truman pressed Congress to raise the income tax, but it was an election year and there was little support. On the contrary, leading legislators were hoping to lower excise taxes and enlarge tax breaks to enhance their chances of victory.

"Congress was in the midst of considering tax legislation when the Korean War broke out."