Beardsley Ruml’s victory over withholding and tax forgiveness in 1943 marked a turning point in U.S. fiscal policy. Despite President Franklin D. Roosevelt’s efforts to limit the amount of tax forgiveness granted to taxpayers, lawmakers agreed to forgive 75 percent of a full year’s tax liability. Ruml, treasurer of R.H. Macy Co. and a prominent public intellectual, continued to advocate for broader debates about fiscal policy and the necessity of federal taxation.
In a provocative 1946 opinion article titled “Taxes for Revenue Are Obsolete,” Ruml argued that modern nation-states didn’t need taxes to fund their operations, as they had alternative tools available. He proposed that taxes should be viewed as instruments of social and economic reform rather than simply revenue collection. Ruml’s stance challenged traditional public finance principles and the conservative policy agenda, especially his call for abolishing the corporate income tax.
Ruml’s article was published in American Affairs, a journal known for presenting controversial ideas from business leaders and intellectuals. Despite adopting a radical pose with his arguments, Ruml’s ultimate goal was to advance non-radical ends, such as the elimination of the corporate income tax. He believed that taxes on business should serve the public interest and be carefully considered based on their practical effects.
Ruml highlighted the role of taxes in stabilizing the purchasing power of the dollar, redistributing wealth, and subsidizing industries. He emphasized the importance of using taxes as a tool for economic stability in the post-World War II era. Ruml also discussed the need to regulate inequality and social welfare through taxes, suggesting that certain taxes should be assessed based on their impact on American life rather than solely as revenue measures.
Ruml made a case against corporate income taxes, citing three negative consequences: uncertainty in tax incidence, distortion of managerial judgment, and double taxation on shareholders. He argued that the corporate income tax should be abolished due to its detrimental effects on production, investment, and business integrity. Ruml’s proposals aimed to benefit consumers, workers, and shareholders while allowing managers to make rational business decisions.
While Ruml’s ideas have drawn comparisons to modern monetary theory (MMT) due to his questioning of the necessity of funding government with tax revenues, some MMT advocates argue that his views were more conventional. Ruml’s support for zero corporate taxation and orthodox views on fiscal policy aligned with the interests of the business community. Despite his provocative language, Ruml’s ultimate goal was to create space for corporate income tax repeal and improve economic outcomes for various stakeholders.
