At that time, taxes were paid the year after they were accrued. You sent quarterly checks to the government in 1936, for example, to pay your 1935 taxes. And tax rates were rising every year. The problem of selling the idea of tax withholding to the American people worried the Congress. It's interesting that, although the 1913-1917 experience with taxpayer resistance and criticism of withholding is hardly ever mentioned in policy discussions, fear of the public reaction underlies nearly all of the debate.
People are very sensitive about their paychecks, after all.
Enter the improbably-named Beardsley Ruml, Treasurer of Macy's Department Stores and Chairman of the Federal Reserve Bank of New York. Ruml was worried about the fact that retirees from Macy's always seemed to have financial problems the first year of retirement, because they had to pay last year's taxes from this year's reduced income. So, my friend, this is how the Washington establishment managed to set up a program that takes away your money before you even see it. It was a bipartisan coalition of Progressive activists, religious populists, and newly-enfranchised women that passed Prohibition, for example. In less than thirty years, the number of Americans subject to Federal income tax had increased a hundredfold.