America Needs a War Tax
Abstract
The 2025 government shutdown, the longest in modern American history at 43 days, exposed a critical vulnerability in US national defense: the military’s dependence on a dysfunctional appropriations process. This article argues that the United States should establish a dedicated war tax and sovereign-wealth-style trust fund to insulate military readiness from political gridlock, restore the historical norm of shared sacrifice, and eliminate the self-inflicted strategic risk of funding the world’s most powerful military on borrowed money.
Introduction
When the federal government shut down on October 1, 2025, most of the attention focused on the partisan gridlock that led to the shutdown. For 43 days, the longest government shutdown in modern American history, Washington pointed fingers while the machinery of national defense ground to a halt. Almost no prominent voices acknowledged the vulnerability the shutdown had exposed. That silence is even more dangerous than the political theater that created it. While headlines obsessed over the partisan spectacle, the shutdown froze the US military in place, broadcasting to our adversaries that America’s greatest weakness isn’t foreign threats; it’s our own inability to govern ourselves. Few signals undermine great-power credibility more than the inability to keep one’s own military funded.
The people who make the force lethal, from the men and women of the U.S. Armed Forces and their families, to the civilian experts who keep operations running, were left facing delayed pay, halted support, and stalled training. The shutdown disrupted the steady rhythm of global operations, both training and kinetic. Freezing the military in time, even briefly, has consequences back pay can’t undo. Training plans slip. Readiness declines. Civilian specialists essential to complex missions go unpaid. Units that rely on predictable funding to sustain momentum are forced into standstill. When the financial stability of those who defend the nation becomes bargaining leverage, the force becomes less ready, less agile, and less lethal.
During those 43 days, a unit preparing to deploy lost a critical training opportunity due to a lack of funds. The delay cascaded through their pre-deployment schedule, pushing back readiness by weeks, ballooning costs due to operational delays, and leaving Marines less prepared than planned. Meanwhile, the government borrows the money used to remedy operational delays, which means taxpayers will pay interest on it for decades. But the dollars aren’t the worst of it. American servicemembers deployed without optimal training, and that could cost lives. We’re willing to risk readiness and spend millions to avoid paying for government operations upfront, but what’s the real cost?
When the shutdown hit, I was preparing for a felony trial where my client’s freedom was at stake. Instead of reviewing evidence and building our defense, I spent hours rescheduling travel because the civilian staff who usually handled it had been furloughed. My client deserved better. So did the Marines whose training fell apart the same way. We’re cutting corners on the things that matter most because we refuse to fund our government properly upfront.
When the shutdown finally ended on November 12, Washington congratulated itself for restoring back pay and unfreezing training budgets, as though refunding the mission erased the damage. It doesn’t. Disrupted schedules and degraded readiness aren’t reversed by retroactive pay any more than replacing a fire alarm after the fire can save a house already burned. The Congressional Budget Office estimated the shutdown cost $11 billion in real GDP. Congress solved the paycheck problem, not the readiness crisis.
Budget Workarounds Are Not Solutions
When Congress failed to fund the government, the Administration got creative. By reprogramming Research, Development, Test, and Evaluation (RDT&E) appropriations and tapping emergency accounts, the Department of Defense kept paychecks flowing to uniformed service members. The move earned applause. It shouldn’t have.
Raiding the R&D budget to cover military pay stretches General Transfer Authority, typically provided in Section 8005 of the annual National Defense Authorization Act, to its breaking point. It arguably bypasses the Purpose Statute (31 U.S.C. § 1301), which requires appropriated funds be used only for their explicitly authorized purposes. The Administration took money Congress earmarked for future technological superiority and used it to solve a short-term liquidity problem. The legality is dubious. The precedent is dangerous. And the foundation may not hold during the next crisis.
Meanwhile, tens of thousands of civilian employees who keep the defense enterprise running, including maintenance crews, logisticians, intelligence analysts, and cyber operators, went unpaid. Executive improvisation is not governance. It’s a tourniquet mistaken for a cure.
Three Strategic Risks of Improvised War Finance
A Fractured Force
The budget juggling created a dangerous divide between uniformed service members and the civilian experts who stand beside them. Paying one group while abandoning the other fractures morale across the entire workforce. Past shutdowns have triggered resignations, slowed hiring, and forced furloughs of key personnel, all of which erode the continuity and institutional knowledge that readiness depends on. The message to the civilian workforce was unmistakable: you are expendable when the politics get hard.
Sacrificing Tomorrow’s Edge
Cannibalizing the R&D budget isn’t a harmless accounting trick; it’s a permanent trade-off. Every dollar pulled from RDT&E means delays in next-generation platforms, setbacks in cybersecurity, and lost ground in emerging domains like hypersonics, autonomous systems, and space warfare. Programs like the Next Generation Air Dominance initiative and AI-enabled battlefield tools are exactly the capabilities put at risk. We borrowed from the future to paper over the present, and the future doesn’t offer refunds.
No Guarantees Next Time
This ad hoc workaround carried no promise of repeatability. The next shutdown may find these emergency funding streams exhausted or legally inaccessible, leaving no financial cushion to pay troops at all. Once General Transfer Authority hits its cap, the Anti-Deficiency Act triggers an immediate, mandatory stoppage of pay: no exceptions, no workarounds. The gesture bought short-term calm but exposed long-term instability, trading tomorrow’s technological edge for today’s illusion of normalcy.
Borrowed Wars and Deferred Accountability
This is a question of fiscal responsibility, the very thing both parties claim to champion but neither actually practices. Back pay eventually reaches service members and the tens of thousands of civilian support staff who stand beside them. But the anxiety and disruption reveal deeper rot: the financial security of those who defend the nation can be held hostage by partisan disputes at any time, for any reason. This is not an isolated problem. America’s longest wars, Afghanistan and Iraq, were financed almost entirely through borrowing, adding trillions to the national debt while obscuring real costs and deferring them to future generations. The politicians who incurred that debt are long out of office. The generations who will pay for it never deployed. We waged wars on a national credit card, and the bill is still compounding.
A war tax funneled to a dedicated National Defense Trust Fund would force a simple but uncomfortable honesty: if a conflict matters enough to fight, it matters enough to fund. Not with borrowed money. Not with raided R&D accounts. Not with the next generation’s tab. Now.
The Case for a War Tax
The concept is hardly radical. For most of history, the expectation was simple: if a nation fought, its citizens paid. Rome sustained its legions through a tributum, roughly[1] one to three percent of assessed wealth, that tied citizens directly to military ventures. When Rome ceased taxing its own citizens and relied instead on conquered tribute, it created what Keith Hopkins identified as a structural dependency between military expansion and fiscal solvency, and what we might call a military-fiscal trap: a system that could only be sustained by perpetual expansion. When expansion stopped, solvency collapsed, and with it, the state. The principle is clear: a great power must fund its core defense through a stable, domestically controlled economic base.
The United States understood this lesson for most of its history. In 1798, Congress enacted the first direct federal tax to fund naval expansion. The War of 1812 and Mexican-American War maintained the tradition, covering roughly 21 percent of costs through doubled import duties and new excise taxes; a figure made worse by the fact that anticipated tariff revenue failed to materialize, as wartime trade disruption undercut the very customs base Congress had counted on to fund the fight. The twentieth century’s major wars saw a return to broad public contribution. During World War I, Liberty and Victory Bonds turned millions of ordinary citizens into creditors of the government. World War II represented the high-water mark of shared sacrifice: nearly of workers filed tax returns and the top marginal rate reached 94 percent. The Korean War stands as the only major U.S. conflict financed almost entirely through taxation, proof that large-scale war funding without borrowing is possible when political will exists.
Then the discipline collapsed. Vietnam’s costs were deferred through deficit spending, and when a 10-percent income surtax was finally enacted in 1968, the conflict had already been financed primarily through borrowing, contributing to the inflation that defined the era. The Persian Gulf War was financed overwhelmingly by allied contributions – the GAO found that Kuwait, Saudi Arabia, Germany, Japan, and other partners covered roughly 88 percent of the operation’s costs – shielding the American public from any direct financial burden. But the ultimate deviation came with the post-9/11 wars. Afghanistan and Iraq were financed entirely through borrowing, routed through emergency supplemental appropriations exempt from normal budget caps, and launched alongside the 2001 and 2003 tax cuts that reduced federal revenues as war spending soared; the Costs of War Project at Brown University’s Watson Institute estimates the total obligation at more than $5.6 trillion, with interest payments alone projected to add trillions more to the national debt over coming decades. This completely severed the link between the costs of war and the responsibilities of citizenship. The people who serve pay with their bodies and their mental health. The public pays nothing. That is not shared sacrifice. It is selective sacrifice.
Shared Sacrifice Has Become Selective Sacrifice
The idea of making Americans actually pay for their wars isn’t radical; it’s a recurring proposal that keeps dying on the vine. During the Iraq War, Rep. Charles Rangel championed both a military draft and a war tax to ensure all Americans had skin in the game. Rep. David Obey introduced a similar bill to fund the Afghanistan War: a one-percent surtax with higher rates for wealthier households, exempting those who served in combat. Senator Russell Feingold and others pushed “pay-as-you-go” wars. Scholar Sarah Kreps has made the case that war taxes function as a check on endless military engagements. Every one of these proposals emphasized fairness, accountability, and honest cost planning. None became law. But together they laid the groundwork for a reform whose time has come.
A war tax advances two values the current system abandons: democratic accountability and civic equity. Empirical research comparing tax-funded and debt-funded conflicts shows that wars financed through borrowing tend to face weaker public oversight and fewer democratic constraints on duration because costs are deferred rather than confronted. When citizens write checks, they pay attention, and when they pay attention, they vote. A representative who commits the country to a war the public is directly funding faces a constituency with skin in the game and a ballot in hand. That is the restraint the Founders understood and that deficit financing has systematically dismantled. Our current system concentrates sacrifice at the bottom. While we cannot conscript the wealthy without a draft, we can require that those who will not bleed for a war pay a materially larger share of its cost. Lower-income families provide a disproportionate share of military manpower while wealthier Americans contribute neither bodies nor, under the present tax structure, proportionate treasure. A progressive war tax begins to correct that imbalance and so does an elevated corporate rate. When companies profit from conflict, taxing those profits at war-rate levels creates at least a partial check on the financial incentives that drive war profiteering. A dedicated War Trust Fund will insulate readiness from political dysfunction: uninterrupted pay, uninterrupted training, uninterrupted procurement. No more freezing the force in place while Congress fights over continuing resolutions. We can no longer risk emergency improvisation of national defense.
Designing a Modern War Tax
The most workable design is a progressive income-based surtax stripped of exemptions. Flat taxes fail the equity test. Sin taxes don’t scale to the true costs of modern war. A surtax layered onto the existing income tax system balances fairness and administrative simplicity while tying contribution directly to ability to pay.
The structure: widened two-percent and four-percent brackets spread broadly across upper-middle and high-income earners, with six-percent and eight-percent tiers for incomes exceeding $2 million annually. All Americans at or below 200 percent of the federal poverty line – $31,920 for a single individual and approximately $64,920 for a family of four under the 2026 HHS poverty guidelines – are exempt. Every major tax preference is eliminated: no deductions, no credits, no preferential capital gains rates. No arbitrage. No loopholes. No mechanism for high earners to pay lower effective rates than those beneath them.
A 1.75-percent surtax on corporate profits for companies with over 50 employees or $100 million in revenue broadens the base. Using Bureau of Economic Analysis statistics, with corporate profits before taxes of roughly $3.16 trillion in calendar year 2022, a 1.75-percent levy would generate approximately $55 billion annually. A five-percent annual levy on household net wealth above $1 billion captures capacity to pay that escapes annual-income frameworks. In combination, this framework can raise on the order of $1 trillion per year, enough to fully fund current defense requirements while generating a surplus for strategic reserves.
The War Trust Fund: A National Security Endowment
Channeling surplus revenue into a sovereign-wealth-style War Trust Fund would smooth expenditures across peace and war while eliminating emergency borrowing. Using the FY2026 NDAA topline of $890.6 billion as a benchmark, a war-tax package generating $1.4 trillion annually would leave approximately $509.4 billion for investment. Assuming a conservative five-percent return, the fund would reach roughly $6.41 trillion after 10 years and $16.84 trillion after 20. Around year 21, when principal reaches approximately $17.81 trillion, annual returns alone would cover the entire defense topline without additional taxation or borrowing. War finance ceases to be a perpetual emergency and becomes a durable national security endowment.
Congress could model the fund’s governance on Norway’s Government Pension Fund Global, which deposits surplus petroleum revenues into a professionally managed fund, invests globally across equities, bonds, and real assets, and limits annual withdrawals to the expected real return of roughly three percent to preserve principal. Governance is deliberately technocratic: Parliament sets the rules, the Ministry of Finance defines ethical and allocation guidelines, and the central bank executes investment strategy at arm’s length from politics.
A U.S. War Trust Fund could adopt the same separation of powers: Congress defines the mission and guardrails, an independent board manages assets, and withdrawals are capped by statute to sustainable levels. The law must include hard firewalls: funds could not be reprogrammed for non-defense purposes or used to offset unrelated deficits. Annual reporting and independent audits would be mandatory, not ancillary features but the core of legitimacy. The difference between an endowment and a credit card is the difference between strategic autonomy and structural dependence.
National Security Is a Non-Partisan Issue
This proposal is intentionally non-partisan, not because war finance is politically neutral, but because national security demands solutions that transcend partisan convenience. The argument is directed at those who think seriously about strategy, readiness, and civil-military relations, rather than at elected officials for whom borrowing has become a comfortable escape from accountability. Republicans say they believe in balanced budgets yet borrow trillions for defense. Democrats demand responsible funding for domestic investments yet borrow indefinitely for military operations. A war tax forces accountability on both sides and removes the ability to hide the true cost of national defense.
Time to Shoulder the Cost of War
War has never been free. Only recently has it been made to appear so. For most of American history, citizens were asked to pay higher taxes during wartime, embodying the principle of shared sacrifice. The current arrangement, where the people who fight pay with their bodies and their mental health while the public pays nothing, is a radical departure.
What this proposal offers is not simply a new tax but a structural correction to how the United States wages war. It replaces improvisation with planning, secrecy with transparency, and deferred obligation with shared responsibility. Most importantly, it aligns fiscal policy with strategic reality: wars are national decisions with national costs. If the country is unwilling to pay for them openly, it should be unwilling to fight them casually.
A war tax tells the world, and ourselves, that when America goes to war, we mean it, we pay for it, and we stand behind the men and women who fight it. Fiscal honesty is patriotism in practice. The challenge requires courage and bipartisan leadership, but Americans have never lacked either when the cause was clear. This measure is overdue. Its moment has arrived. History will not be kind to those who let it pass, and neither will the creditors.
[1] Note: While Smith’s Dictionary of Greek and Roman Antiquities puts the normal tributum rate at 0.1%, rising under Cato to 0.3%, some modern secondary sources render this as 1–3% in an effort to account for inflation.
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