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Historical Perspectives on the Federal Income Tax










Social Security
            See Also:
Social Welfare
Social Security
Enforced Savings
Victory Tax

“…I believe there should be a maximum of cooperation between the States and the Federal Government.  I believe that the funds necessary to promote this insurance should be raised by contribution rather than by an increase in the general taxation.  Above all, I am convinced that social insurance should be national in scope, although the several States should meet at least a large portion of the cost of management, leaving to the Federal Government the responsibility of investing, maintaining, and safeguarding the funds constituting the necessary insurance reserves…” (Congressional Record-Senate, June 8, 1934, pages 10769-71, letter from the President Franklin D. Roosevelt)

“Also in connection with the purposes of this legislation I am sure we all appreciate that we live in a machine age, an age of great invention; and unless we are going to correct this position, under the laws of invention, the monopoly that is granted and the principle profits that come from an invention are going to accrue to the management of industry and not be divided as an appanage to those who work with their hands.   The invention of machinery crowds out hundreds of thousands of men and women who labor with their hands.  We know that the future holds in store much unemployment and its attendant distress, especially unemployment in old age, and we may as well make this step now looking forward to that future date so that the advantages that accrue from the machine and this age of discovery in which we live shall take care of the people displaced.  All our people must be taken care of under legislation of this character, and I say that the bill is a wonderful step in advance…I believe it is our duty as a nation of great wealth and of great surpluses to provide a scheme of government that through the years will build up the necessary reserves to provide for security in old age, of motherhood, and of childhood.  This bill, in my opinion, is a step in the right direction” (Congressman Greenwood of Indiana, April 11, 1935, from the Congressional Record-House, page 5456)

Congressional Record-House, April 18,1935, page 5953-55, Congressman Mott:
 “The revised McGroarty bill provides for the raising of the revenue necessary to create the fund wherewith to pay the pensions by the levy of a 2-percent tax upon transactions…. To finance it by raising the rates on existing taxes would more than double those rates, because the financing of adequate pensions will require as much money annually as the entire present Federal tax revenue… I wish it were possible to find a tax which the very poor did not have to pay at all, but no one, I am sure, believes that is possible.  It is the poor who have always been really taxed, regardless of what the form of taxation has been.  The great-income taxpayers, for example, have always managed to pass along most of the tax to the consumer, although the tax the income-tax payer pays is merely a tax upon his profits.  Even this tax he passes on to the ultimate consumer who, as has truly been said, is for the most part poor.  Throughout all history that has been the case.  The rich always have been few.  Always the poor have been multitude.  From the beginning the poor have carried upon their backs the burden of the world.  They still carry it.  They have fought the battles, they have created its wealth, they have paid its taxes, and as their reward they have died, as they have lived, still poor. I say this has been so.  But has not the time now come to inquire whether it must continue to be so forever?  Is there always to be no hope, no reward, no surcease from the never-ending toil of the masses of our people/”

Congressional Record-House, April 19, 1935, page 6080, Congressman Dorsey:
 “Mr. Speaker, the social-security program which has been presented to this legislative body for enactment into law has received more attention from our citizenry than any other legislation presented to this Congress, mainly because it “reaches home” to almost every wage earner.  Its passage will stamp this Democratic Congress as one of the most important historically in the period of our existence as a sovereign entity…
 While I look on the pay-roll tax with some concern, particularly when I realize that the average worker is now taxed from his weekly wage for health and accident insurance, and other forms of group insurance, including death benefits, and for fraternal insurance benefits of various types, I nevertheless, will support this legislation, because I know that it is a serious attempt to recognize the security of the worker as a governmental responsibility.”

Congressional Record-House, April 19, 1935, page 6080, Congressman Dorsey:
 “Mr. Speaker, the social-security program which has been presented to this legislative body for enactment into law has received more attention from our citizenry than any other legislation presented to this Congress, mainly because it “reaches home” to almost every wage earner.  Its passage will stamp this Democratic Congress as one of the most important historically in the period of our existence as a sovereign entity…
 While I look on the pay-roll tax with some concern, particularly when I realize that the average worker is now taxed from his weekly wage for health and accident insurance, and other forms of group insurance, including death benefits, and for fraternal insurance benefits of various types, I nevertheless, will support this legislation, because I know that it is a serious attempt to recognize the security of the worker as a governmental responsibility.”

Congressional Record-House, April 18,1935, page 5988, Congressman Vinson of Kentucky:
“Under Title II there are certain annual appropriations that are placed in the old-age reserve account.  There is an obligation in this bill upon the part of the Federal Government that such appropriations will earn 3 percent compounded annually, in order to build up the reserve.   The committee amendment, as offered, makes it mandatory on the Secretary of the Treasury that the special obligations which may be issued hereunder must yield at least 3 percent interest annually.
 This provision is desired in order that there may be no deficit in the old-age reserve account, so that at the time the aged will be entitled to receive the benefits, sufficient money will be in the account.”

Congressional Record-House, April 18,1935, page 5993, Congressman Jenkins of Ohio:
 “Why, bless your life, you are going to build up a fund that by 1970 will have a surplus of $33,000,000,000.
 This is thirty-three thousand million dollars which will be in the hands of the Secretary of the Treasury and is more money than there is in the world.  And you are going to raise this by compulsion.  Regardless of its constitutionality…The Government, by virtue of the passage of this act, will have wrung out of the poor people of this coming generation the greatest surplus ever contemplated by the brain of any business man.”

Congressional Record-House, April 18, 1935, page 5991, Congressman Reed of New York:
 “The best legal talent the administration has been able to engage from the departments and elsewhere has endeavored to so frame title II, change its title, distort it, and put the tax feature in title VIII, to mislead and deceive, if possible, the Supreme Court of the United States.  I stated yesterday, and I state again today, that the members of the committee in their conscience know that title II and title VIII are unconstitutional.  They know they are trying to set up as a Federal activity a police power that is reserved to the States…
…for, as I have said, you are not giving these benefits to the needy at all- but you are saying to the wage earner, “We are going to force you to pay a tax to buy an annuity from the Government.”

Congressional Record-Senate Volume 79, June 18, 1935, page 9514, Senator George:
 “…I do not believe that any lawyer of experience would assert that the bill is free from constitutional question.  I do not wish to expand the constitutional argument, because the Senate is not in a receptive mood, but the bill undertakes to impose a tax upon specific employers….
…But if the court looks through mere form to the substance of this bill, I assert again that the question of the validity of the bill is one which no responsible lawyer would undertake to say is not in serious question”

Congressional Record-Senate Volume 79, June 18, 1935, page 9531, Senator Long”
 “No, I an talking about the bill.  Everyone doubts the constitutionality of the bill.  Even proponents of the bill doubt it.  I dare say to them that they not only have a right to doubt it but I do not believe it is possible for the bill as it is now written to be held constitutional.  I would bet everything I have on it.   I do not mean that it will be held unconstitutional by a divided court either.”

 The Social Security program is discussed by Congress, in relation to the 1942 revenue Bill, on pages 8004- 8009, October 9, 1942.
 
  Social Security Trust Accounts
 
 
            See Also:
Social Welfare
Social Security
Enforced Savings
Victory Tax





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