Correction:
An earlier version of this column misstated a figure cited by Alan D. Viard of the American Enterprise Institute. Viard, former senior economist at the Federal Reserve Bank of Dallas, said that a 10 percent war surtax would increase the tax rate of Americans who pay income taxes by one-tenth, not by 1.1 percent. Also, in referring to those who would not be affected by such a surtax, the column said that 40 percent of U.S. households pay no taxes at all. Those households pay no income tax but might incur payroll and other taxes. This version has been corrected.
White House press secretary Jay Carney last Wednesday caught my eye when he talked about members of Congress, currently vocal about the deficit, who were on Capitol Hill over the past decade and voted for unpaid large tax cuts but “put two wars on the credit card without paying for them.”
That last phrase reflected words used in 2007 by several House Democrats who wanted to institute a war surtax to pay for the then-increasing costs of U.S. activities in Iraq and Afghanistan.
These days, one of them, Rep. Jim McGovern (D-Mass.), believes such a levy should be on the agenda of the debt-reduction “supercommittee.”
“These wars ought to be paid for and not put on a credit card so that our kids will have to pay for this in the future,” McGovern said in a recent telephone interview. “It’s morally wrong for members [of Congress] to call for support of our soldiers and then not ask the rest of us to pay for it . . . or have it left to the poor and middle-income and seniors to bear the sacrifice along with our soldiers and their families. That’s wrong.”
More than $1 trillion already has been added to the deficit by expenditures generated by Iraq and Afghanistan, the first wars undertaken by U.S. presidents since the War of 1812 that have not been financed in part by a special tax. There were three taxes instituted to pay for the Civil War.
In the Spanish-American War, political leaders felt compelled to pay for most war costs because it was a war of choice, not compulsion.
World War I saw a debate about sharing the cost with future generations. The Washington Post wrote at the time, “ ‘Pay as you go’ is the reply of those who insist that present-day taxpayers shall carry the whole burden of present and future preparedness.”
No one complained about the heavy new taxes during the years of fighting in World War II and even in the postwar period, when funds, such as those that financed the Marshall Plan, helped pay for reconstruction of Europe. And even though many of those taxes were still in place when the Korean War broke out, Congress still passed new taxes in 1950 and 1951 to help pay for that conflict.
For the Vietnam War, even though President Lyndon B. Johnson had said the country could have “guns and butter” for a time, in 1968 Congress passed a 10 percent surcharge, which meant 10 percent of owed income tax was added to the bill to pay for the war.
The Congressional Budget Office this year estimated the total costs of Afghanistan and Iraq, projected out to 2017, could reach $2.4 trillion, if you include $705 billion in interest for the money borrowed to finance them.
A 10 percent tax surcharge, similar to the one during the Vietnam War, would bring in roughly $112 billion if applied in 2012, according to Alan D. Viard, a scholar at the American Enterprise Institute and former senior economist at the Federal Reserve Bank of Dallas. That would just about cover the expected $116 billion for war costs in 2012.
Although Viard said he was not endorsing such a step, he said the surtax would not affect the 40 percent of American households that pay no income tax at all and would add just one-tenth to rates of those who do pay income tax.
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