In April 2003, two weeks after the United States launched the invasion of Iraq that currently costs Americans $12 billion a month, then House majority leader Tom DeLay declared that “Nothing is more important in the face of war than cutting taxes.” The next month, DeLay followed through by joining his fellow House Republicans in passing a package of tax cuts that the Congressional Budget Office estimated would drain nearly $61 billion from the federal treasury in 2003 alone.

Just decades earlier, when military hawks were also deficit hawks, such words and deeds would have been unimaginable. As one Republican lawmaker explained in 1967, “I just dont see how we can be hawks on the war and then vote against taxes to pay for it.” This contrast in wartime tax policy is the subject of War and Taxes, a provocative and fascinating new book by tax scholars Steven A. Bank, Kirk J. Stark, and Joseph J. Thorndike. Synthesizing earlier historical scholarship, the authors examine the social, political, and economic conditions that have driven fiscal policymaking during every major U.S. conflict from the American Revolution to the present entanglements in Iraq and Afghanistan. The result should be required reading for all lawmakersno matter who wins in November.

War and Taxes isnt intended as a partisan brief against the Bush administration and its penchant for tax cuts and deficit spending. Instead, the authors have set out to provide a judicious, if at times ironic, history of opposition to wartime tax increases. In contrast to the conventional presumption that wartime patriotism has always and everywhere trumped self-interest, they contend that Americas “commitment to wartime fiscal sacrifice has always been uneasyand more than a little ambiguous.” Although they concede that the Bush administrations wartime tax cuts mark an “abrupt departure” from “a strong tradition of wartime fiscal sacrifice,” the authors seek to show that our current president is not the first commander in chief “to delay, deny, and obscure the trade-off between guns and butter.”

The books carefully marshaled historical evidence, however, spotlights the unprecedented nature of George W. Bushs fiscal policies. And herein lies the irony: War and Taxes does provide a valuable corrective to the overly romanticized history of wartime sacrifice, but it can also be read as a damning indictment of recent policy. Past leaders may have contested and cloaked the need for wartime tax hikes, fearing the political consequences or biding time for more opportune moments. Eventually, however, they all gave in. Only the Bush administration has resolutely failed to accept its fiscal responsibilities.

The importance of wartime fiscal discipline was perhaps most evident during the Civil War. Initially, both Northern and Southern leaders dodged and disavowed the need for painful fiscal sacrifices, because each side believed that the conflict would be short and painless. But when the cost of the war escalated, the Union ratcheted up existing levies and enacted the first federal income tax to finance the war. By contrast, the Confederacybuoyed by its outsize military confidence and burdened by its antidemocratic political culturecontinued to resist nearly any form of centralized taxation until it was too late. And while the North relied on a variety of broad-based taxes to underwrite the war, the South mainly printed money and used unsupported public debt, which led to disastrous inflation. At the start, Abraham Lincoln may have resisted tax hikes, but unlike Jefferson Davis, he mustered the political will to go against business interests and other opponents of wartime tax increases.

Although Americans were initially divided over U.S. entry into World War I, they seemed to embrace the notion of shared sacrifice once the country officially entered the conflict. Building upon the achievements of the Progressive movement, including the advent of a graduated income tax, Woodrow Wilson and his congressional allies unleashed a fiscal revolution by funding the Great War with a host of “soak-the-rich” tax laws. Marginal rates soared to nearly 80 percent, and Congress levied taxes on inheritance and “excess” wartime profits. These ideas were stretched further during World War II.

In what is perhaps the books most compelling account, the authors show how the sense of civic engagement triggered by the attacks on Pearl Harbor spurred a second fiscal revolution, one that transformed our income tax system from a “class” tax to a “mass” tax affecting a broad cross-section of the population. Though business elites quietly protested tax increases, Franklin Delano Roosevelt asked the country to put “patriotism ahead of pocketbooks.” “I have called for sacrifice,” he told Congress, “and a part of sacrifice means the payment of more money in taxes.”

But as World War II gave way to the Cold War and more ambiguous foreign entanglements, appeals to patriotism were no longer enough. The timing of wartime tax hikes became pivotal. Contrasting the fiscal policies of the Korean and Vietnam conflicts, War and Taxes makes a convincing case for the importance of “striking while the iron is hot.” Soon after American troops reached Korea in 1950, the statesman John Foster Dulles declared that “the time for sacrifice and discipline is here … There will be fewer automobiles, television sets, and gadgets to buy and there will be bigger tax bills to pay.” Taking advantage of the combination of general prosperity, the political pressures of McCarthyism, and bipartisan congressional support for the conflict, the Truman administration swiftly transformed a preconflict tax relief bill into a major wartime tax increase, the largest in nearly a decade. Committed to not passing the buck to the next generation, lawmakers forged a tax policy that, the authors write, became “the closest the country has ever come to a pure pay as you go approach to war financing.”

Truman would be the last president to show this kind of wartime fiscal resolve. By the mid-1960s, with the war in Vietnam and the war on poverty both in full swing, Lyndon Johnson claimed that the nation could continue its massive spending without increasing taxes. “This nation is mighty enough, its society healthy enough, its people are strong enough to pursue our goals in the rest of the world while still building a Great Society here at home,” he told Congress in his 1966 State of the Union Address. “Time may require further sacrifices. And if it does, then we will make them. But we will not heed those who wring it from the hopes of the unfortunate here in a land of plenty.”

Reality soon caught up with Johnsonwithin a year, he requested an income tax “surcharge” linked to increased spending for Vietnam. The tax hike was not enacted until eighteen months later, but by then Johnsons misplaced optimism had taken a toll on the president as well as the budget. Near the end of his life, he bitterly recalled how “that bitch of a war” had “killed that lady I really lovedthe Great Society.”

Johnsons critical error, the authors argue, was his failure to channel the American publics initial support for the Vietnam War into shared sacrifice, as Truman had done in Korea. It was a mistake repeated by George W. Bush, who told Americans after 9/11 to go shopping instead of asking us to buy bonds or pay higher taxes. But Johnson ultimately signed off (albeit begrudgingly) on a major tax hike and domestic spending cuts shortly after he announced his decision not to seek reelection. Bushs continued reluctance to account for his astronomical war debt reveals how the current administration has broken with a long-standing tradition of shared wartime sacrifice.

The authors are correct to caution against contrasting present policy with a “cardboard cutout version of the imagined past.” Received wisdom is often overly simplified. But it is also sometimes accurate. Our present leaders have not only squandered opportunities to harness wartime sacrifice, they have also abdicated any sense of fiscal accountability.

To their credit, the authors admit this “inescapable fact,” and the last chapter of War and Taxes is thus a seemingly incongruous but plausible explanation for why the Bush administration is flying in the face of history. The authors suggest that the recent inversion in the politics of wartime taxation may be explained by broader changes in economic, political, and social conditions, namely the growing insignificance of inflation, the marginalization of deficit concerns, and the end of the draft.

Still, it is difficult to come away from this balanced, thorough, and nonpartisan account without thinking that we have arrived at a new era of wartime tax policymaking. Earlier administrations and Congresses may have had momentary lapses of resolve, but today we seem to have entered a new age of sustained fiscal irresponsibilityan era in which too many political leaders cling to the dubious claim that “nothing is more important in the face of war than cutting taxes.”

Ajay K.Mehrotra teaches law and history at Indiana University, Bloomington. He is currently at work on a book about taxation and American state building during the Progressive Era.

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