History Lessons on Tax-Policy Strife

Old Blog Import

This is from a book review…

What comes through clearly in”The Great Tax Wars” is that even though income taxes are accepted today and seem to have been around forever, they are a relatively recent development. For most of the 18th and 19th centuries and the early part of the 20th, the federal government depended not on income taxes, but rather on revenues from customs duties, liquor and tobacco. These are all consumption taxes, based on what people consume. They are the polar opposite of income taxes.

On a proportionate basis, high-income people are less affected by these consumption taxes than low-income earners because they spend a smaller proportion of their income on consumer goods. The opposite is true of income taxes, which affect high-income people much more than low-income ones.

Mr. Weisman attributes the Union victory partly to the North’s willingness to raise significant sums through an income tax, which the Confederacy did not do. The South, where most wealth consisted of slaves and agricultural property, was at a disadvantage compared with the North, where the rising merchant and manufacturing classes were better able to pay taxes than the asset-rich but cash-poor Southern gentry.”

NY Times