Worksheet Solutions The Wealth Tax and the Victory Tax
Theme 2: Taxes in U.S. History
Lesson 5: The Wealth Tax of 1935 and the Victory Tax of 1942
Key Terms
mass tax—A broad tax that affects a majority of taxpayers.
progressive tax—A tax that takes a larger percentage of income from high-income groups than
from low-income groups.
tax code—The official body of tax laws and regulations.
tax evasion—A failure to pay or a deliberate underpayment of taxes.
withholding (“pay-as-you-earn” taxation)—Money, for example, that employers withhold from
employees paychecks. This money is deposited for the government. (It will be credited against
the employees’ tax liability when they file their returns.) Employers withhold money for federal
income taxes, social security taxes, and state and local income taxes in some states and localities.
Summary
During the 1930s, government expenditures on New Deal programs were enormous. Congress’s
introduction of the 1935 Wealth Tax cut into the incomes of the wealthy and increased revenue.
Many responded by using loopholes in the federal tax code. The government in turn cracked
down on tax evasion. Later, the expenses of World War II again exceeded federal tax revenues.
The Victory Tax, the broadest and most progressive tax in American history, was passed in
1942. So many people now paid income taxes that it was considered a mass tax. It was collected
by withholding money from workers’ paychecks.
Activity 1
Use the clues to unscramble the tax vocabulary word. Write your answer in the space provided.
1. If you do not pay your taxes, you may be accused of this. (xta esiovan)
tax evasion
2. This is a method of collecting taxes. (whigindthol) withholding
3. This is a tax that most people pay. (sasm xat) mass tax
4. This is a tax that takes more from wealthy people. (girsesoprev)
progressive
5. This provides all the tax rules. (xta edco) tax code
Understanding Taxes 1
