President Reagan's drive to revamp the nation's tax laws continues a cycle of small-scale "New American Revolutions" in tax policy that has pitted federalists against populists for more than two centuries.
The emotions aroused by tax policy led to a "tea party" in Boston Harbor and a revolt by whiskey producers in southwestern Pennsylvania. In the effort to find a tax formula that is both simple and fair, Congresses since George Washington's time have imposed levies on everything from chewing gum to slaughtered cattle to snuff.
The personal income tax, in particular, has heated passions and political debate. First imposed by President Abraham Lincoln during the Civil War (and then abolished), the income tax later became the rallying cry of the Greenbacks, the Anti-Monopolists and the Populists, who thought it was more fair to the poor than excise and sales taxes.
Despite the American people's traditional distrust of strong, centralized government, Washington has had a tendency to grow -- and gobble up more tax dollars -- in times of major crisis.
The last great crisis was World War II, and the result was the tax system that Americans know today, including direct withholding from paychecks and an expansion of the tax base to include most working, self-supporting adults.
"World War II shifted emphasis from a narrow-base income tax affecting 8 million taxpayers to a broad base, ultimately affecting 60 million, and brought individual income tax to tens of millions of taxpayers for the first time," historian Lillian Doris wrote in her book, "The American Way in Taxation."
Presidents have always tinkered with the tax system to increase revenues to fight wars. The Spanish-American War, the War of 1812, the Civil War and World War I all produced sweeping tax-law changes -- many features of which lingered long after the fighting stopped.
But in most of those earlier cases, the wartime taxes were later lifted. Instead, from colonial times until 1944, the government raised most of its revenue through tariffs and excise taxes.
The tax changes that grew out of World War II, however, were retained long after the war's end, to support a vast new array of social welfare programs.
"By the end of the war," said tax lawyer Donald Alexander, a former Internal Revenue Service commissioner, "the income tax had become such a great revenue generator and the government's need for revenue was so great, that no one thought of abandoning it."
But while the structure of the World War II tax system has remained largely intact, the tax rates themselves have undergone almost continual revision and updating -- most recently in 1981, when Congress passed Reagan's three-year tax cut.
Reagan's tax-simplification plan, if approved, would amount to the most fundamental change in structure since World War II. But it would still amount to little more than tinkering in an income tax system that has increased dramatically in size and complexity, now accounting for more than half of the government's operating revenue.
The roller-coaster history of American tax history also shows how two purposes -- one fiscal and the other social -- underlie taxation. Many taxes are enacted to raise revenue, but often social goals influence what is taxed as the federal government gets into the business of regulating what its citizens buy and make.
The first instance of a tax's being used strictly to regulate was when Congress imposed a levy on oleomargarine in 1866 to keep oleo from competing with the butter industry. In 1899, Congress imposed taxes on opium manufactured for smoking. More recent regulatory taxes have included levies on phosphate matches and machine guns.
"We use the tax system for all sorts of mysterious purposes," Alexander said, "both as a revenue generator and to discourage people from buying things."