In his speech, Rose Garden, who launched a global trade war, announcing the broadest tariffs in contemporary history, President Donald Trump gave a lesson of his audience, which dispersed from the actual recording:
“Then in 1913, for reasons unknown to humanity, they set a tax on income so that citizens, not foreign countries, began to pay the money necessary to govern our government. Then in 1929 it ended with great depression, and it would never happen if they were left with the tariff policy; it would be completely different.”
So why did we set the income tax? Were there people who knew what reasoning? And did the 1913 actions lead to great depression in 1929?
There is a clear consensus among historians in these points. No, income tax was not a mistake.
But it was something unfamiliar: a 40-year-old struggle and an accident.
In 1913, the states ratified the 16th amendment that gave the federal government to “collect taxes on income from what the source was received”.
However, this is not the first income tax efforts.
Within a few short years, during and after the civil war, the United States imposed its first income tax to help finance great war costs. Located on relatively high income, but only collecting a modest percentage, it was filed as a way to make the necessary profits and a way of maintaining justice.
Yes, this is right, one of the main points of sale of taxation was that it was a way of achieving “justice” in the load of war. Responding to the allegations that only poor men fought and dying, President Abraham Lincoln and his Republican Party made sure that the law would require taxes to be publicly disclosed. Not surprisingly, wealthy men from a dawn gilded age did not like to see their tax information on the New York Times pages. Wealthy interests forced the cancellation tax in 1871, and the federal government returned to financing with the proceeds from the fee for users and tariffs.
However, efforts to strengthen the rich. Congress transferred in 1894 to enter the income tax again. Populist politician Konzan William Jenings Brian gave a famous speech on the Congress floor. Answering the argument that wealthy leave America if they have to pay such a tax, and then offered 2% on the best income, he said:
“Of all the vile men, whom I knew, I never knew what I would say about him, that his patriotism was less than 2 percent … If” some of our best people “prefer to leave the country rather than pay a tax of 2 percent, God regrets the worst.”
Congress passed the law. A year later, however, the Supreme Court contradicted it 5-4 in the case of Pollock V. Farmers’s Loard and Trust Company. The Lincoln Party, which is dominated by wealthy northeastern interests. Him Platform 1894. He said the income tax “would bring ODIUM to any party to support it,” and predicted the “party burial”.
Populists, like Brian, did not give up. The Young Democratic Congress from Tennessee called Cordel Hal in his maiden speech on the floor in 1908, in which he proposed to transfer another income tax, which is ready to risk the “Odium and Burial”.
Halla’s efforts did not gain great impetus at this time, but he did not refuse. He talked to anyone and everyone’s income tax, so when the leaders of their own party saw him approaching, they “turned the other way,” he reminded.
He soon succeeded, but only through the help of the party that was against the Republican income tax.
In 1909, the country faced a serious decline in federal income and an extended deficit after the 1907 financial panic, which ended only by rescuing JP Morgan, the most powerful era. At the same time, with new duties, such as an attempt to keep food and medicines safe and maintaining the growing empire abroad, the needs of the federal government have exploded. A few years earlier, Congress allocated $ 1 billion for the first time (about $ 30 billion in today’s dollars).
To resolve these issues, the Republican Party appealed to the tariffs. The tariffs not only remained the cornerstone of the republican economic policy, but were also the key to the political power of the party. Whenever the new tariff bill came to the consideration, it looked like “throwing bananas into the monkeys cage,” said economist Henry George. Lobbyists from each corner of the American industry descended to the capital to push for lower dump trucks on their companies, and if possible to educate them on someone else.
Tariffs and levies in things such as tobacco and alcohol were deeply unpopular with the public. They were regressive, costing working people a much higher percentage of their income than rich. In one of his speeches, Hal attacked a new dominant class of oligarchs: “The world has never seen such enormous success as we see in the current era … Carnegie, Vanderbilt, Morgans and Rockfellers, with their billions of wealth.”
Hal said: “It would seem that this class of people considers themselves almost insured against any taxation.” He closed his speech with a warning to his congressional colleagues: “Public sentiments arise.”
In Washington, legislators had the generosity of new ideas to raise funds. Some Congress members have offered a legacy tax, others – the corporation income tax, and others wanted a stamp tax on commercial documents. As president, Theodore Roosevelt supported the income tax, though he did not do much to push him legally. Most republican senators, many of whom were the millionaires themselves, had light disgust for some proposals and specific hatred of income tax.
Nelson Oldrich, leader of the majority of the Senate from Rhode Island, millionaire and father-in-law John D. Rockfeller, was perhaps the most powerful politician at the time. Teddy Roosevelt nicknamed “King”. In 1909, Oldrich tried to adopt a new tariff bill. Halle Democrats created a problem for him, but not the only one. He also encountered a rebellious faction within his party, progressive Republicans. These were largely south -western and western leaders who argued for what they called the interests of the workers, as well as reforms to raise public safety and strengthen trade unions. They also supported income tax.
Oldrich has tried a number of legislative maneuvers to detain their voices for anything about income tax. Proponents were unresolved, and, as the next step, he and then President William Taft put his weight for income tax from the corporation, claiming it would be less evil than income tax. The wealthy did not like it, but it was surprisingly passed, leaving Republicans who hoped the income tax was killed. In a private letter to the acquaintance, the president explained: “A lot of people who attack (income tax) will be pleased to use it as a means of preventing income tax further.”
The turt turned out to be overly optimistic. Profit fans continued to press, trying to raise money directly into the wealthy ones. The discussion has come as to whether Congress could just pass the law on income tax or since the Supreme Court has recently shot down one or a amendment to the Constitution. Hal noted that the composition of the court had changed and claimed that the law could pass the collection with the judges.
Then one progressive Republican proposed a profit amendment.
Oldrich attacked that he perceived as the wrong step of his opponents. He dropped his support to the best as a means of placing supporters of national income tax. In return, enough legislators agreed to return the tariff bill of Old Radz.
Aldrich, of course, did not support the profit amendment, but thought it was too radical to ratify three -quarters of states, the minimum, which requires the Constitution. Leading politicians believe that the defeat is likely to kill income tax over the years, if not a generation.
Hal agreed with this analysis and was despised. “It has long been understood that Republicans never support a decent cause until they force public sentiment. Too stupid to develop and adopt useful laws, as well as formulate and comply with reasonable administrative policy, this piratic organization does not wait until the Democrats show on the way,” he said.
And so Nelson Oldrich, the senator who made more than virtually any other American politician in history to protect the wealthy, presented what would prove to be a historical measure for amendments to the Constitution and clearly allow the income tax. A few days later, with a small fanfare, the amendment adopted the Senate with a single vote of 77-0.
Soon Congress passed Tariff on the tariff on the Payne AldrichGiving Oldrich his victory.
But Oldrich calculated, and Hal was too gloomy. After the slow start, the political wind shifted and came enough states for ratification. The amendment was ratified in four years. He then fell into Hal to write almost solely what became the 1913 income tax.
Hal’s plan was ancient. He stipulated that if the United States was confused in the war that participated in the attacks on delivery, imports would dry, and the tariff income would fall. When the United States went into war against Germany in 1917, Congress had to raise income tax rates to make the money required to pay for the shipment of soldiers to Europe.
So no, President Trump, the origins of income tax are not lost in history.
But did the tax depressed a large depression 16 years after its entry into force, as Trump claimed? No serious economist thinks so. Here is one point of data: in the 1920s, Republicans returned the presidency. Andrew Mellon, one of the richest people in the country, became the Minister of Treasury. One of the main reasons for which he worked was to reduce income taxes, and the leading economic disaster of the 20th century was actually a decrease in these tax rates.
The data is similar to Trump’s arguments that further dependence on the tariffs for the government would provide a great depression. In June 1930, President Herbert Hoover signed a law on Smoot-Hawley, which significantly raised taxes on imported goods in the hope of raising the US industry and increasing work work. Hoover rejected the arguments of his own economists who warned that other peoples would respond to their tariffs by affecting the trade war in which each country loses.
Economists are now agreeing that Guver’s tariffs have deepened the economic downturn that began with a 1929 catastrophe. President Franklin Delan Roosevelt gradually reduced tariffs during his presidency, and his democratic and republican successors continued this picture in the 21st century.
Today’s situation has a similarity to the years of income tax. The American economy is again marked by the inequality of wealth, with the biggest gap between the rich and the poor we saw from gilded age. We are holding discussions on how to reduce federal deficit, about As honestly and properly taxed rich And about what the government size will be. Last week, Trump reached history to restore tariffs on the US to the Smoot-Hawley level, causing global sale in stock markets around the world.
