Tax Analysts Blog

Time for a War Tax

Posted on Sep 30, 2009

The United States has been fighting its wars in Iraq and Afghanistan for a long, long, long time. But after eight years, American political leaders still haven't leveled with the American public about the staggering financial cost of these wars. Sure, from time to time, Congress debates special war appropriations. And Republicans and Democrats periodically square off over which party is more committed to "supporting our troops" with adequate funding. But so far, no one has asked the American taxpayer to cough up a dime for either war. And that's a scandal.

By the end of 2009, Congress will have spent nearly $700 billion on the Iraq war, and another $225 billion or so on the fighting in Afghanistan. As a nation, we've met these costs using the same fiscal tools that we use to pay for everything else: a broad, eclectic, and undifferentiated mix of taxes and debt.

What we haven't used is any sort of special war tax (like the 10 percent income tax surcharge enacted during the Vietnam War). Nor have we asked Americans for a general tax increase (as in World War II), with the war serving as an explicit justification for the hike. Indeed, political leaders have made no substantive or rhetorical connection between the cost of our current wars and the way we're going to (eventually) pay for them. And it's not a partisan issue: for all their differences on the wisdom and winnability of these wars, Republicans and Democrats have been sadly united in their commitment to fiscal self-indulgence.

As President Obama considers sending more troops to Afghanistan, he should also consider some sort of symbolic war tax. Current economic conditions preclude any serious effort to pay for the war out of current revenue, and that's OK. After all, the nation borrowed to pay for past wars, too. But as I've argued before, wartime leaders have always coupled the economic necessity of debt with the political (and economic) necessity of taxation. We need a small but meaningful war tax. We should have had it long ago, but I'd rather have it late than never.

In theory, both hawks and doves should support a war tax. After all, if these wars are worth fighting, then they are worth paying for. And if they're not worth fighting, then it's important to point out how much money we're wasting.

But that's just theory. In reality, no one supports a war tax (or almost no one). And that's too bad. As Adam Smith pointed out a couple of centuries ago, taxes can have a salutary effect on the conduct of a war:

    Wars would in general be more speedily concluded, and less wantonly undertaken. The people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and government, in order to humour them, would not be under the necessity of carrying it on longer than it was necessary to do so. The foresight of the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for.

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