Dimensions of Law in the Service of Order: Origins of the Federal Income Tax, 1861-1913

Dimensions of Law in the Service of Order: Origins of the Federal Income Tax, 1861-1913

Dimensions of Law in the Service of Order: Origins of the Federal Income Tax, 1861-1913

Dimensions of Law in the Service of Order: Origins of the Federal Income Tax, 1861-1913

Synopsis

A sophisticated and accessible application of the newest theoretical work in public-policy history and legal studies, this book is a detailed account of how a permanent income tax was enacted into law in the United States. The tax originated as an apology for the aggressive manipulation of other forms of taxation, especially the tariff, during the Civil War. Levied with very low rates on a small proportion of the population and raising little revenue, the early tax was designed to preserve imbalances in the structure of wealth and opportunity, rather than to ameliorate or abolish them, by strengthening the status quo against fundamental attacks by the political left and right. This book shows that the early course of income taxation was more clearly the product of centrist ideological agreement, despite occasional divergences, than of "conservative-liberal" allocative conflict.

Excerpt

As Chairman of the Senate Finance Committee, John Sherman was arguably the most powerful man in Congress in the spring of 1870. Charged with the formulation of national fiscal policy in the wake of the unprecedented tensions and opportunities set loose by the crisis of the Civil War, his committee, together with the House Ways and Means Committee headed by fellow Ohio Republican Robert C. Schenck, directed the application of federal power in the critical and intimately related fields of appropriation, taxation, currency, and the financing of the newly massive public debt. By that spring, the Congress's imaginative and determined manipulation of the tax system in particular had resulted in its extension into new fields, in the interest of powerful constituencies, in the service of a very traditional and widely shared commitment to promote not only war and debt finance but also the magnificent productive economic forces glimpsed in the 1850s.

Now in question was which of the many war-generated taxes should be removed as the system approached its final postwar form. Specifically, with the debt safely financed, and in the face of revenue surpluses, the issue which John Sherman wished his colleagues to face was the wisdom of maintaining income taxation, in force since 1861, as a significant component of that postwar plan. Easily renewed in the House, the tax had stalled in the Senate in the midst of protracted debates over tariff increases and reductions in internal revenues. His address would help the measure to passage.

Bright, sophisticated, and deliberate, as well connected as any legislator in history, John Sherman was offering neither an income tax of significant allocative impact, nor a rhetorical justification which could . . .

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