The 1916 presidential campaign occurred during the Mexican Revolution and World War I. Americans wanted no part of foreign wars. Woodrow Wilson campaigned with the slogan, “He kept us out of war.” But Wilson was a practical man. He knew he had to have a plan in case it became impossible for the United States to remain neutral, and that plan had to include financing.
Wilson proposed the 1916 Emergency Revenue Act. It was aimed at increasing federal revenue through tax reforms. It marked a shift in U.S. fiscal policy, responding to the financial needs of World War I and laying the groundwork for future tax structures.
In March 1916, North Dakota newspapers reported on what was in the proposed legislation. The main piece of the bill was an increase in income taxes, which was designed to raise $100 million. A tax on the manufacture of munitions was expected to raise between $25 million and $40 million. Another $20 million would be raised through taxes on a variety of products, including beer and whiskey.
On this date in 1916, President Wilson signed the Emergency Revenue Act. Of special interest to most Americans was the increase in the income tax. The lowest rate increased from 1 percent to 2 percent. The top rate, for Americans making more than $2 million per year, increased to a staggering 15 percent. Wilson was able to convince Americans that a shared sacrifice was necessary.
While the act gained the support of political leaders who understood the need for increased revenue, others were skeptical. One review of the act noted that taxation is “the art of so plucking the goose as to secure the largest amount of feathers with the least amount of squawking.”
Presidents frequently enlisted the help of North Dakotans for advice and assistance. When Wilson was elected, he knew his policies would affect the size and scope of government. With finances as the centerpiece of his policies, he wanted a strong man as his treasurer. He appointed John Burke from Rolla. As North Dakota governor, Burke had implemented many progressive reforms, including the creation of the office of tax commissioner. Wilson made a wise choice. Burke was a capable treasurer. Although he was a Republican, even Democrats acknowledged that he managed the country’s money very carefully.
Dakota Datebook written by Dr. Carole Butcher
Sources:
- Oakes Times. “Agree on Plan to Increase Revenue.” Oakes ND. 3/23/1916. Page 8.
- W. Elliott Brownlee. “Wilson and Financing the Modern State: The Revenue Act of 1916.”the American Philosophical Society Vol. 129, No. 2 (Jun., 1985), pp. 173-210 (38 pages) Published By: University of Pennsylvania Press.
- Matthew Bender and Staff. Federal Revenue Law 1916.” Albany NY: Matthew Bender and Company, 1917.
