Defend this, Defenders! President Obama speaks out on Trade Promotion Authority

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27. Until they were replaced by the income tax - a progressive victory.

The Hidden Progressive History of Income Tax Replacing Tariffs and Excise Taxes

Tariffs and excise taxes meant that almost the entirety of federal tax revenue came from the poor while the rich paid virtually nothing. This spawned enormous outrage.

Everyday Americans hated the tax system of the Gilded Age. The federal government gathered taxes in two ways. First, it placed high tariff rates on imports. These import taxes protected American industries from competition. This allowed companies to charge high prices on products that the working class needed to survive while also protecting the monopolies that controlled their everyday lives. Second, the government had high excise taxes on tobacco and alcohol, two products used heavily by the American working class.

Today, we are supposed to hate paying taxes. They are our “tax burden.” We vote for politicians who will reduce our taxes, even if that means destroying the welfare state. Conservatives’ century-long war against taxes has paid off by convincing everyday Americans to think taxes are a horrible thing that pays for government waste.

Our ancestors knew this was not true. The income tax was the most popular economic justice movement of the late 19th and early 20th century. This truly grassroots movement forced politicians to act in order to stay in office, leading to the 16th Amendment to the Constitution in 1913. That’s right, the income tax was so popular that the nation passed a constitutional amendment so that the right-wing Supreme Court couldn’t overturn it.

The income tax became such an overwhelming political movement during the 1890s that Congress, despite so many members' close relationship with the plutocracy, passed an income tax law that would have forced the rich to begin paying income taxes for the first time since 1870. ... But the Supreme Court in 1895 declared the federal income tax unconstitutional in the case of Pollock v. Farmers’ Loan & Trust Company. This was the same set of judges who ruled segregation constitutional in the case of Plessy v. Ferguson...

http://mobile.alternet.org/alternet/#!/entry/the-hidden-progressive-history-of-income-tax,51754f28da27f5d9d0a7ea44/1

Progressives turned to the income tax to fund the government to get away from the reliance on tariffs and excise taxes (we call them sin taxes today) on alcohol and tobacco products which hurt the poor and workers rather than the rich.

Perhaps not surprisingly, 8 years after the amendment was ratified republicans came to power and promptly raised tariffs 3 times (1921, 1922 and 1930) and cut the new income taxes. The result was that the US income inequality got progressively worse until it reached historic proportions by the end of the decade.

Raising tariffs did not make the US a more equitable nation. Which is why FDR went about reducing them while he was in office and devised institutions (like GATT) that would make it difficult for future politicians to raise tariffs. FDR knew that a fair society requires progressive taxation, strong unions, a decent safety net and effective corporate regulation - not high tariffs.