How Tax Policies Have Shaped American History.
PRAY FIRST for God to guide lawmakers to enact fair and sustainable tax policies. May they seek the seek ways to balance the budget with responsible spending.
Jesus said to them, “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.” – Mark 12:17
Taxes have been part of life and serve as a means for governments to fund public services and infrastructure. In the U.S., taxation became a central issue during the American Revolution, with colonists protesting British taxes without representation. After gaining independence, the U.S. government implemented various taxes to sustain national operations, but it was not until the Civil War that the first income tax was introduced to fund military expenses.
The Rise of Income Taxes
During World War II, the federal income tax system became a permanent fixture. The government needed steady revenue to finance the war effort, and payroll withholding made tax collection more efficient. After the war, the infrastructure of the tax system remained, evolving to fund growing government responsibilities.
Periods of crisis, like the World Wars and the Great Depression, often led to significant tax hikes. The Revenue Act of 1935 raised taxes on the wealthiest Americans to support New Deal programs—reflecting the government’s role in economic recovery. These moments illustrate how taxation has been used both as a tool for progress and a source of tension.
The modern U.S. tax system includes income, payroll, property, sales, and excise taxes. While these taxes fund essential services like healthcare, education, and infrastructure, they affect people differently. Lower-income families may feel a heavier burden from sales taxes, while property taxes can make homeownership difficult in high-cost areas.
What Drives Tax Increases?
Taxes often rise to address budget deficits, fund new programs, or respond to economic shifts. For example, state and local taxes have increased in recent years to cover public safety, transportation, and healthcare costs.
When taxes increase while wages stagnate, families may struggle to afford basic necessities. Middle-class households may see their disposable income shrink—limiting their ability to save or invest. Small businesses can also suffer, with higher taxes cutting into profits and hindering growth.
Historically, tax increases have hit working families hardest, widening income disparities. Meanwhile, large corporations often have the resources to navigate tax codes or leverage deductions, exacerbating public frustration.
Federal tax rates are set by Congress and signed into law by the President, while state and local governments manage regional taxes. The IRS administers tax collection, but elected officials decide how funds are allocated.
There are mechanisms to prevent unchecked tax increases, such as public referendums and tax caps in certain states. Additionally, programs like the Earned Income Tax Credit (EITC) aim to relieve financial pressure on low- and moderate-income families.
During President Trump’s first term in office, taxes generally went down for most Americans due to the Tax Cuts and Jobs Act (TCJA) of 2017. Since the start of his second term in 2025, President Trump has proposed several significant changes to income taxes, including abolishing federal income taxes for lower earners, extending the Tax Cuts and Jobs Act (TCJA of 2017), eliminating taxes on Social Security Benefits, tax exemptions on tips and overtime, and reducing corporate tax rates. These proposals are part of his broader strategy to reduce the tax burden on individuals and businesses, stimulate economic growth, and simplify the tax code.
Where Does the Money Go?
Tax revenue funds a wide array of services, dependent on whether they are federal, state, or county taxes, including:
– Public Safety: Law enforcement, fire departments, and emergency services.
– Education: Public schools, libraries, and state universities.
– Social Programs: Medicaid, SNAP, and housing assistance.
– Infrastructure: Roads, public transportation, and utilities.
– Defense and Security: Military operations and homeland security.
– Debt and interest: Ensures the government meets debt obligations and creditworthiness.
Allocating funds requires balancing competing priorities, often leading to policy debates about where money is most needed.
Unchecked tax increases can destabilize communities. Families may downsize homes, delay medical care, or forego higher education. Prolonged financial strain can erode public trust, potentially leading to social unrest.
For many years, the United States has consistently spent more than it has collected in tax revenue, leading to a growing national debt. The ongoing debate centers around whether increasing taxes on citizens can effectively reduce this debt.
Historical examples, like the fall of the Roman Empire, show that unsustainable tax policies can contribute to societal collapse. Conversely, high-tax societies like Scandinavia demonstrate that when paired with robust social programs, higher taxes can support widespread well-being.
Why It Matters and How We Can Respond
Understanding taxation isn’t just about managing personal finances—it’s about recognizing how tax policies shape the well-being of entire communities. We are called to care for our neighbors, especially those struggling to make ends meet. Paying taxes can be an expression of collective responsibility, contributing to societal welfare and ensuring public services are available to those in need. However, when tax burdens grow disproportionately heavy on vulnerable populations, it’s important for us as believers to engage in thoughtful advocacy for policies that promote sustainable well-being for all.
Proverbs 11:25 tells us, “Whoever brings blessing will be enriched, and one who waters will himself be watered.” This reminds us that a flourishing society is one where resources are shared wisely, and caring for others can contribute to the common good. We can play an essential role in promoting conversations about ethical taxation, supporting local initiatives that aid struggling families, and seeking wisdom on how tax systems affect different socioeconomic groups. By balancing civic duty with compassion, we can help create an environment where generosity and justice walk hand in hand—striving not just for personal prosperity but for a world where every individual has the opportunity to thrive.
HOW THEN SHOULD WE PRAY:
— Pray for wisdom for those in federal office as they create tax policies that affect various socioeconomic groups. Grant them knowledge that they may use it as a tool for the betterment of America. An intelligent heart acquires knowledge, and the ear of the wise seeks knowledge. Proverbs 18:15
— Pray for God to direct our leaders as they support community aid and local organizations that aid families struggling with financial insecurity. Whoever is generous to the poor lends to the Lord, and he will repay him for his deed. Proverbs 19:17
CONSIDER THESE ITEMS FOR PRAYER:
- Pray for our nation’s leaders as they seek ways to balance the federal budget and spending needs with the tax burden on the American people.
- Pray for God to provide stability for families feeling financial strain and to open doors for those burdened by heavy tax obligations.
- Pray that God would grant Americans a heart of gratitude, trusting that God is sovereign over every aspect of life, even in times of financial uncertainty.
Sources: U.S. Chamber of Commerce, U.S. Department of the Treasury, Congressional Budget Office, Pew Research Center, U.S. Bureau of Labor Statistics, Internal Revenue Service, Bradford Tax Institute, The National Archives, Brookings Institution, OECD Publishing
