Dakota Datebook

Tough Taxes

Monday, March 11, 2013

 

1943 proved a tough tax season for the Fargo Tax Division of the Bureau of Internal Revenue. Division workers headquartered on the second floor of the Fargo Federal Building began processing as many as 20,000 claims a day on this date in 1943, in anticipation of the looming March 15th deadline. With the passage of new tax legislation, more Americans were filing income taxes than ever before.

For much of the country’s history, income taxes were either non-existent or created for short-term situations, and even then, few Americans actually paid an income tax. In 1939, it was estimated that less than a fifth of American workers filed income taxes.

The poor compliance was blamed on the methodology – with the individual worker burdened with the responsibility of reporting their income each year and paying the tax. In 1940, with the prospect of war growing each day, it became clear that federal spending was growing. Between 1940 and 1945, several laws were passed to increase taxes and participation. The 1942 Victory Tax bill levied an additional income tax on every American worker to help fund the war effort. Two further bills were also passed, the Revenue Bill of 1943 and the Current Tax Payment Act of 1943. The Current Tax Payment Act forever altered the method of income tax collection; from that year on, income taxes would be withheld from each worker’s paycheck. With these changes, the number of taxpayers increased from 4 million in 1939 to 50 million in 1945, and the amount of taxes collected increased twenty-fold.

Many of these changes were first enacted during the 1943 tax season, inundating each state’s tax division with first-time filers. The Fargo division was forced to hire an additional 20 collectors to help process the state’s record number of claims. With more than 120,000 claims to process, a Forum reporter visiting the headquarters on March 11 that year called the tax division the “biggest business in town.”

 

Dakota Datebook written by Jayme L. Job

 

Sources:

Dill, Joseph (ed.). 1988 North Dakota: 100 Years: p. 36. The Forum Publishing Company: Fargo, ND.

The Fargo Forum and Daily Tribune. Friday (Morning ed.), March 12, 1943; 35 (215): pp. 1.

http://www.independent.org/newsroom/article.asp?id=2092

http://www.taxhistory.com/1943.html

http://eh.net/encyclopedia/article/tassava.WWII

http://www.taxhistory.org/thp/readings.nsf/cf7c9c870b600b9585256df80075b9dd/671f701c110a19d9852

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http://www.infoplease.com/ipa/A0005921.html

 

This text and audio may not be copied without securing prior permission from Prairie Public.

Dakota Datebook is a project of Prairie Public, in partnership with the State Historical Society of North Dakota, with funding from the North Dakota Humanities Council.

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