The Tax Collector

What It Covers

How Elmer Irey and the IRS transformed from an obscure agency into a powerful law enforcement force by prosecuting Al Capone for tax evasion, then expanded federal taxation during the New Deal and World War Two.

Key Questions Answered

• •Tax Evasion Prosecution: The 1927 Supreme Court ruling established that illegal income is taxable, enabling the IRS to prosecute criminals like Al Capone through financial investigations rather than traditional law enforcement methods, leading to his 1931 conviction and imprisonment.
• •Mass Taxation Shift: The Victory Tax of 1942 expanded income tax from 5% of workers to millions of Americans, transforming it from a class tax on the wealthy to a mass tax, fundamentally changing how the federal government funded operations.
• •Withholding System Creation: Tax withholding implemented in 1943 deputized employers as tax collectors, automatically deducting payments from paychecks before workers received them. This system, initially temporary for wartime, became permanent and remains the primary collection method today.
• •Government Expansion Pattern: World War Two permanently expanded federal government size and scope. Post-war spending on national security, atomic weapons, and social programs required sustained high taxation levels, establishing the modern administrative state that citizens encounter in daily life.