By 1936 the top U.S. personal income-tax rate had been raised to 79%, with a 70% maximum estate tax. The top federal corporate tax rate, however, was only 15%. In response, wealthy Americans accumulated profits inside corporations that owned their residences and other assets. Hollywood actors had their compensation paid to corporations they owned and from which they borrowed heavily.

Suddenly, at Roosevelt’s urging, Congress tore up all this careful and legal tax-avoidance planning with the Revenue Act of 1937. Corporate money was subject to immediate distribution and taxed at high individual rates. In effect, these were accumulated-wealth taxes, imposed at precisely the wrong time. The year also saw the introduction of a 1% Social Security tax on the first $3,000 of wages.

The economic pain was swift and severe. The Dow Jones Industrial Average crashed to 114 on Nov. 24, 1937, from 190 on Aug. 14, a 40% decline. Gross domestic product fell by more than 5% between 1937 and 1938. Unemployment, roughly 12% in May 1937, climbed to 20.7% in April 1939. Industrial production tumbled 33% from the spring of 1937 to May 1938 and didn’t return to its 1937 peak until late 1939.

Many factors contributed to the decline, including a contraction in the money supply and a doubling of bank reserve requirement ratios. But taxes, particularly the Revenue Act’s undistributed profits tax, were the trigger. Without much warning, businesses and individuals had to raise large amounts of cash quickly by cutting back on workers and investments to pay taxes that would be coming due. Senate Finance Committee Chairman Byron Harrison was convinced that the tax had proved harmful and enacted a phased reduction beginning in 1938.

Today the U.S. economy is recovering from a great crash, as it was before Roosevelt’s tax onslaught. Unfortunately, Mr. Biden doesn’t seem to have learned the right lessons. Should he win in November, he proposes to cancel the Trump tax cuts, raising the top federal income-tax rate back to 39.6%, and raise the corporate income tax from 21% to 28%. He also promises to limit low capital-gains tax rates to the first $1 million in profits and extend the full Social Security tax to income above $400,000.

In 2011 Stephen J. Entin, then president of the Institute for Research on the Economics of Taxation, told a congressional committee that the “income tax is heavily biased against saving and investment” and that the “burden of higher taxes on capital formation falls largely on labor in the form of lower wages and hours worked.” As in 1937, the effect of Mr. Biden’s proposals would be to draw funds out of the economy to pay taxes, discourage new investment, hurt wages and hours worked, and discourage recognizing capital gains.

Mr. Biden’s plan isn’t the only tax increase circulating around the Democratic Party. Sen. Elizabeth Warren has proposed 2% and 6% wealth taxes on assets valued more than $50 million and $1 billion, respectively. Wealth taxes have mostly been abandoned in Europe because they are difficult to administer, facing hopelessly complicated valuation issues and often hitting people with valuable assets but little cash.

Many blue states are also proposing tax hikes. Progressive New York lawmakers propose raising the top marginal income-tax rate of 8.82% to 9.62% and 11.85% on the “superrich.” That’s on top of New York City’s 3.876% income tax. California lawmakers have proposed raising the Golden State’s 13.3% top rate—highest in the nation—to 14.3% and 16.8%, applied retroactively to the start of this year, in addition to a wealth tax. New Jersey is set to extend its 10.75% top rate to filers earning between $1 million and $5 million. The Garden State governor’s budget would also make permanent a 2.5% corporate surtax, creating an 11.5% state corporate tax.

New York is considering an annual mark-to-market income tax, or M2M, in which stocks and other securities held by residents are valued annually and the gain immediately taxed, rather than waiting until a sale or exchange. A nightmare to calculate, a state-level M2M would also burden people who move to another state, resulting in a double tax on the eventual sale of their assets.

Rep. Ilhan Omar and Sen. Bernie Sanders have introduced the Make Billionaires Pay Act. It would impose a one-time 60% M2M tax on gains in wealth between March 18 and Jan. 1, 2021, by individuals with assets valued at more than $1 billion. Elon Musk would be bankrupted by the tax owed on his Tesla paper gains.

Even death offers no escape. The Democratic Party platform calls for raising estate taxes “back to the historical norm.” It isn’t clear what that means, but a 55% top rate—up from 40% now—with a greatly reduced exemption is often discussed in liberal policy circles. Proposals to repeal the “step-up in basis” for inherited assets could tax the gain once more, on sale by the heirs, resulting in multiple taxation.

Not every tax proposal I’ve outlined will ultimately be enacted. But pass enough of them, and you can expect a disastrous result. Even though Democratic politicians will claim to only target the superrich, a deluge of tax increases can send the whole economy right back to the dumps. As in 1937, today America’s economic recovery is fragile. A campaign against the 1%—the new “economic royalists”—would risk repeating FDR’s mistake.

Mr. Starkman is a certified public accountant in Atlanta and author of “The Sex of a Hippopotamus: A Unique History of Taxes and Accounting.”