Footnote 3Īll home front Americans had to do was buy the planes, this pilot and his fellow flyers would take care of the rest. In the end, proponents of voluntary purchases won the day, arguing that it would "give people an opportunity to do something" more for the war effort. They argued that compulsory bond purchases would avoid some of the vicious excesses of World War I during which society stigmatized those who failed to buy bonds, even to the point of painting their homes and barns yellow. Many advisors urged President Roosevelt to force individual citizens to buy bonds. Still, after raising taxes, the government saw no choice but to move forward with huge bond sales. The largest deficit during the depths of the Depression in the 1930s, even with all the New Deal programs, was about 4 billion dollars a year while during the war these numbers skyrocketed to about 50 billion dollars each year.
Size of the new deficits resulting from the massive expansion of borrowing. While greatly increased tax revenue helped fund the war, the government still needed to borrow more than half of the money for wartime expenses. Footnote 2 National Strategies for Selling Bonds Surcharge on taxes that was also taken out of wages up front. And, important to the Treasury, "very few people would even be tempted to avoid paying taxes." The increased cash flow from the withholding tax was augmented by what the government euphemistically called the "Victory Tax." This was a 5% Taxpayers would no longer have to budget a large amount to pay taxes at the end of the year. By taking the money out of the hands of consumers up front, they wouldn't be tempted to spend it, which would help keep inflation low. The government saw several advantages to the deductions.
And, important to the Treasury, "very few people would even be tempted to avoid paying taxes."Īn important driver of the increased collection was the implementation of the "pay-as-you-go" plan that required employers to automatically deduct a percentage of wages from workers' paychecks as income tax. (ImageĬourtesy Northwestern University Library)īy taking the money out of the hands of consumers up front, they wouldn't be tempted to spend it, which would help keep inflation low. Home front workers could do for the cause. Compared to the sacrifice made by this wounded soldier onĪ bleak battlefield, buying war bonds appear to be the
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