How did withholding taxes get started?

ColumnLogo-1It was sold as a “temporary” emergency wartime measure …TaxesandBonds

American Minute with Bill Federer

War Emergency – IRS Withholds from Paychecks

Withholding taxes from paychecks began JUNE 9, 1943.

Congress passed it as an emergency measure during World War II to get money to fight Hitler.


Withholding taxes was the idea of Beardsley Ruml, the treasurer of Macy’s Department Store who became chairman of New York’s Federal Reserve Bank.

Ruml was helped by Bernard Baruch and Milton Friedman.

The Federal Government got people to sign up for withholding taxes by forgiving them for not paying their lump sum taxes due at the end of 1941.

Called the “Pay-As-You-Go” tax, it was part of the patriotic war enthusiasm which included slogans such as:

“UNCLE SAME NEEDS YOU”;

“BUY WAR BONDS”; and

“SMASH THE AXIS-PAY YOUR TAXES.”

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Bill Federer   www.AmericanMinute.com

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