[[link removed]]

NO, PRESIDENT TRUMP, THE INCOME TAX WASN’T A MISTAKE. BUT IT WAS AN
ACCIDENT.  
[[link removed]]


 

Jesse Eisinger

ProPublica
[[link removed]]


*
[[link removed].]
*
[[link removed]]
*
*
[[link removed]]

_ While instituting the largest tariff increase in modern history,
Trump claimed that the income tax was passed for “reasons unknown to
mankind” and caused the Great Depression. Here’s the real history.
_

An 1895 cartoon satirizing the Supreme Court’s decision to declare
the income tax unconstitutional., MPI/Getty Images

 

_ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign
up for The Big Story newsletter
[[link removed]]
to receive stories like this one in your inbox_.

Series: A Closer Look:Examining the News

More in this series [[link removed]]

In his Rose Garden speech launching a global trade war by announcing
the most sweeping tariffs in modern history, President Donald Trump
bestowed a history lesson on his audience that diverged from the
factual record:
“Then in 1913, for reasons unknown to mankind, they established the
income tax so that citizens, rather than foreign countries, would
start paying the money necessary to run our government. Then in 1929,
it all came to a very abrupt end with the Great Depression, and it
would have never happened if they had stayed with the tariff policy;
it would have been a much different story.”

So why did we institute an income tax? Were there any humans who knew
what the reasoning was? And did the actions of 1913 lead to the Great
Depression in 1929?

There is a clear consensus among historians on these points. No, the
income tax was not a mistake.

But it was something stranger: both a 40-year struggle and an
accident.

In 1913, the states ratified the 16th Amendment, which gave the
federal government the power to “collect taxes on incomes, from
whatever source derived.”

This was not the first income tax effort, however.

For a few short years during and after the Civil War, the United
States imposed its first tax on income to help fund the massive costs
of the war. Placed on relatively high incomes but only collecting a
modest percentage, it was cast as both a way to generate needed
revenue and a way to maintain fairness.

Yes, that’s right, one of the chief selling points of taxing income
was that it was a way of achieving “equity” in the burdens of the
war. Responding to allegations that only poor men were fighting and
dying, President Abraham Lincoln and his Republican Party made sure
the law required that the taxes people paid would be publicly
disclosed. Unsurprisingly, the wealthy men of the dawning Gilded Age
did not like seeing their tax information in the pages of The New York
Times. Wealthy interests forced a repeal of the income tax in 1871,
and the federal government returned to funding itself with proceeds
from user fees and tariffs.

Efforts to rein in the rich persisted, however. Congress moved in 1894
to reintroduce an income tax. The populist Nebraskan politician
William Jennings Bryan gave a famous speech on the floor of Congress.
Responding to the argument that the wealthy would leave America if
they had to pay such a tax, then proposed as 2% on the top incomes, he
said:

“Of all the mean men I have ever known, I have never known one so
mean that I would be willing to say of him that his patriotism was
less than 2 per cent deep. … If ‘some of our best people’ prefer
to leave the country rather than pay a tax of 2 per cent, God pity the
worst.”

Congress passed the law. One year later, however, the Supreme Court
controversially rejected it, 5-4, in the case of Pollock v. Farmers’
Loan and Trust Company. The party of Lincoln, now dominated by wealthy
Northeastern interests, celebrated. Its 1894 platform
[[link removed]]
had declared that an income tax “will bring odium on any party blind
enough to support it” and predicted that party’s “funeral.”

Populists like Bryan didn’t give up. A young Democratic congressman
from Tennessee named Cordell Hull said in his maiden speech on the
floor in 1908, in which he proposed passing another income tax, that
he was willing to risk the “odium and the funeral.”

Hull’s effort didn’t gather much momentum that time, but he
didn’t give up. He obsessively talked with anyone and everyone about
an income tax, so much so that when leaders of his own party saw him
approaching, they “would turn and walk in another direction,” he
later recalled.

Soon he would succeed, but only thanks to the help of the party that
was against the income tax — the Republicans.

In 1909, the country was facing a severe drop in federal revenue and a
widening deficit after the financial panic of 1907, which had ended
only thanks to a bailout led by J.P. Morgan, the most powerful banker
of the age. At the same time, with new responsibilities like trying to
keep food and medicines safe and maintaining a growing empire abroad,
the federal government’s needs were exploding. A few years earlier,
Congress had allocated $1 billion in spending for the first time ever
(about $30 billion in today’s dollars).

To address these issues, the Republican party turned to tariffs.
Tariffs not only remained the cornerstone of Republican economic
policy, they were also the key to the party’s political power. Each
time a new tariff bill came up for consideration was like “throwing
bananas in a cage of monkeys,” economist Henry George said.
Lobbyists from every corner of American industry descended on the
capital to push for lower imposts on their companies and, if possible,
to have them raised on someone else.

Tariffs and levies on things like tobacco and alcohol were deeply
unpopular with the public. They were regressive, costing working
people a far greater percentage of their income than the rich. In one
of his speeches, Hull attacked the new dominant class of oligarchs:
“The world has never seen such colossal fortunes as we behold in the
present age ... the Carnegies, the Vanderbilts, the Morgans, and the
Rockefellers, with their aggregated billions of hoarded wealth.”

Hull said, “It would seem that this class of people consider
themselves almost immune from any kind of taxation.” He closed a
speech with a warning to his congressional colleagues: “Public
sentiment is becoming aroused.”

In Washington, lawmakers had a bounty of novel ideas for raising
funds. Some members of Congress suggested an inheritance tax, others a
corporate profits tax, and still others wanted some version of a stamp
tax on commercial documents. As president, Theodore Roosevelt
supported an income tax, though he didn’t do much to push it
legislatively. Most Republican senators, many of whom were
millionaires themselves, had mild aversions to some of the proposals
and a particular loathing for the income tax.

Nelson Aldrich, the Senate majority leader from Rhode Island, a
millionaire and the father-in-law of John D. Rockefeller Jr., was
arguably the most powerful politician in the country at the time.
Teddy Roosevelt nicknamed him the “King Pin.” In 1909, Aldrich was
trying to pass a new tariff bill. Hull’s Democrats posed a problem
for him, but not the only one. He also faced a rebellious faction
within his own party, the progressive Republicans. These were largely
Midwestern and Western leaders who argued for what they described as
working people’s interests, as well as reforms to improve public
safety and the strengthening of labor unions. They also supported an
income tax.

Aldrich tried a series of legislative maneuvers to delay votes on
anything about the income tax. The proponents were undeterred, and, as
a next step, he and then-President William Taft put their weight
behind a corporate income tax, contending that it would be a lesser
evil than a personal income tax. The wealthy did not like it, but it
passed surprisingly easily, leaving Republicans hopeful the income tax
was dead. In a private letter to a friend, the president explained,
“A good many people who are attacking [the corporate income tax] now
will be glad to use it as a means of preventing the income tax later
on.”

Taft proved to be overly optimistic. Supporters of the income tax kept
pushing, seeking to raise money directly from the wealthy. A debate
ensued about whether Congress could simply pass an income tax law or,
since the Supreme Court had struck one down recently, whether a
constitutional amendment was needed. Hull pointed out that the makeup
of the court had changed and argued that a law could now pass muster
with the justices.

Then, one progressive Republican proposed an income tax amendment.

Aldrich pounced on what he perceived as his opponents’ misstep. He
threw his support to the measure
[[link removed]]
as a means of placating the advocates for a national income tax. In
exchange, enough lawmakers agreed to back Aldrich’s tariff bill.

Aldrich, of course, did not support the income tax amendment, but he
believed it was too radical to be ratified by three-fourths of the
states, the minimum required by the Constitution. Leading politicians
assumed that the defeat of the amendment would likely kill the income
tax for years, if not a generation.

Hull agreed with that analysis and was despondent. “It has long been
understood that the Republicans never support a worthy cause until
forced by public sentiment. Too stupid to devise and enact wholesome
laws and to formulate and execute sound administrative policies, this
piratical organization is wont to wait until Democrats point the
way,” he said in a speech on the floor.

And so Nelson Aldrich, the senator who had done more than almost any
other American politician in history to protect the wealthy,
introduced what would turn out to be an historic measure to amend the
Constitution and explicitly allow income taxes on the rich. A few days
later, with little fanfare, the amendment passed the Senate by a
unanimous vote of 77-0.

Soon after, Congress passed the Payne-Aldrich Tariff bill, giving
Aldrich his victory.

But Aldrich had miscalculated and Hull had been too gloomy. After a
slow start for the ratification movement, political winds shifted and
enough states came around. The amendment was ratified four years
later. Then it fell to Hull to almost singlehandedly write what became
the 1913 income tax law.

Hull’s plan proved prescient. He had foreseen that if the United
States ever became entangled in a war that involved attacks on
shipping, imports would dry up and tariff revenue would plummet. When
the United States joined the war against Germany in 1917, Congress had
to raise income tax rates to generate the money needed to pay for the
expense of sending soldiers to Europe.

So no, President Trump, the origins of the income tax are not lost to
history.

But did the tax cause the Great Depression 16 years after its
enactment, as Trump has argued? No serious economist thinks so.
Here’s one data point: In the 1920s, Republicans regained the
presidency. Andrew Mellon, one of the richest men in the country,
became Treasury secretary. One of the main causes he worked for was
lowering income taxes, and the lead-up to the worst economic calamity
of the 20th century was actually marked by a decline in those tax
rates.

The evidence is similarly clear on Trump’s argument that continued
reliance on tariffs to fund the government would have averted the
Great Depression. In June of 1930, President Herbert Hoover signed
into law the Smoot-Hawley Tariff Act, significantly raising taxes on
imported goods in hopes of boosting American industries and increasing
domestic employment. Hoover brushed aside the arguments of his own
economists who warned that other nations would respond with their own
tariffs, touching off a trade war in which every country would lose.

Economists now agree that Hoover’s tariffs deepened the economic
downturn that had begun with the 1929 stockmarket crash. President
Franklin Delano Roosevelt gradually reduced the tariffs during his
presidency, and his Democratic and Republican successors continued
that pattern well into the 21st century.

Today’s situation has similarities to the pre-income-tax years. The
American economy is again marked by wealth inequality, with the
largest gap between rich and poor we’ve seen since the Gilded Age.
We are having debates about how to reduce the federal deficit, about
how to fairly and adequately tax the rich
[[link removed]]
and about what the appropriate size of government would be. Last week,
Trump reached back in history to restore U.S. tariffs to the
Smoot-Hawley levels, triggering a global selloff in stock markets
around the world.

Correction
APRIL 8, 2025: This story originally incorrectly identified William
Jennings Bryan as a Kansan politician. He represented Nebraska.

* US History
[[link removed]]
* income tax
[[link removed]]
* Great Depression
[[link removed]]
* Tariffs
[[link removed]]
* Donald Trump
[[link removed]]

*
[[link removed].]
*
[[link removed]]
*
*
[[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web
[[link removed]]

Submit via email
Frequently asked questions
[[link removed]]
Manage subscription
[[link removed]]
Visit xxxxxx.org
[[link removed]]

Twitter [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]