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Notes -
Income taxation didn't really take off until the invention of tax withholding. Even after the ratification of the 16th Amendment, Congress found popular resistance to the income tax too strong for it to actually be enforced. It wasn't until they partnered with corporations, which were growing in importance in society, to withhold taxes that resistance died down and the tax could be collected. Psychologically, it makes a big difference. You see a number at the end of the year that corresponds to what the government took, but they took it before you even knew they were taking it. You get a paycheck and then there's some accounting about how much they took which comes with a bonus for you. At least, for most people.
Your dates don't really line up though. Withholding isn't until 1943. You see higher income taxes earlier, after Roosevelt becomes president. You then see an even steeper rise in taxes in general as the USA becomes more and more involved in the war. Finally in 1943 you see withholding implemented, but this is after a decade of higher and higher taxes spurred on by the depression and war. After WW2 you see lower, but still high income taxes and finally income taxes come down after the neo-liberal revolution in the 80s. Withholding doesn't seem important in this picture.
The story I heard was Milton Friedman came up with withholding...hated the idea of it as a more small government person, but thought it was the best way to get enough money to win WWII.
No idea how true that is.
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