Governments regularly claim that they favour tax reform. When this claim has been repeated so many times that virtually no one believes it anymore, they announce a tax reform to show that they really mean it. They then reshuffle the existing taxes to give the appearance that taxation will actually be lowered.
When it becomes apparent that the reform is a sham, they often pull a rabbit out of a hat in the form of a "temporary" tax that’s pre-legislated to end sometime in the future.
Sounds promising.
So, let’s have a look at one such temporary tax and see how things worked out.
The US government introduced the War Revenue Act of 1898—a tax on telephone use—under the claim that it was necessary to pay for the Spanish-American War.
In what way does telephone use pertain to a government invading another country? Well, actually, one has nothing to do with the other. But, let’s leave that discussion for another day and see how this temporary tax played out.
The Act was repealed in 1902 but was reinstated, this time as the Emergency Internal Revenue Tax Act of 1914. The justification then given was that another war was on the way, and increased taxation to pay for it couldn’t begin too soon. Telephone users needed to cough up.
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This wasn’t an accident—it was by design. But now, something big is happening.