06 Sep 2012

Lying Politicians Outsourcing

Economics 20 Comments

OK kids, I want to make the point in a forthcoming paper that we should be wary of “revenue neutral tax reform,” and cite what happened with the federal income tax after it was introduced in 1913. At first the rates were really low, mostly on the rich. But by 1918 the rates had skyrocketed to pay for the war to end all wars.

So, I’d really like to get quotes from politicians / boosters at the time (leading up to the Amendment) telling everyone to chill out, that it would always be just a little nuisance, etc.

Please post links in the comments.

NOTE: I am lazy and on a time crunch. I don’t really need these until Wednesday of next week, but I can’t be running to the library etc. before then. So if you have, say, Charles Adams book on taxes, you can’t just give me the page number, because I don’t think I have that book handy right now. (I think I own it, but I don’t know where it is.) So clearly the Pareto optimal solution is for you to type in the exact quote with citation, and promise on your mother’s life that you did it right, OR you can scan it and email it to me or post it online. Please be considerate of my needs in this project.

20 Responses to “Lying Politicians Outsourcing”

  1. Reply
    Nathan says:
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    Huh? Should YOU promised on your mother’s life that the people you’re asking to do your work did it right?

    • Reply
      Bob Murphy says:
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      Not sure I follow you.

      • Reply
        Nathan says:
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        Sorry, that should read: “Shouldn’t YOU promise on your mother’s life that the people you’re asking to do your work did it right for you?” 🙂

        • Reply
          Bob Murphy says:
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          Then no, that wouldn’t make any sense. How could I promise to other people things that I can’t observe?

          • Reply
            Nathan says:
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            ummm, it was a joke. You’re asking other people to do your work.

  2. Reply
    Ken B says:
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    Can’t help you Bob: you don’t believe I *have* a mother.

  3. Reply
    Tel says:
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    There are some charts and background (Australia of course).

    http://archive.treasury.gov.au/documents/1156/HTML/docshell.asp?URL=01_Brief_History.asp

    It shows 100 years of gradual federal takeover in a nice rising percentage of GDP. Also it admits that the original intention of income tax was as a war tax:

    Between 1915 and 1942, income taxes were levied at both the state and federal level, leading to complexity and inequitable taxation of income across states. The Second World War saw fundamental changes to Australia’s taxation system. In 1942, income taxation was consolidated by the federal government to increase revenue as a war-time measure. As a result, the states’ tax base was reduced (see Chart 1), replaced by federal government grants. The states’ tax base was supplemented in 1971, when the then federal government ceded control of payroll taxes to the states.

    I have been unable to find a hard and fast promise that income tax would be temporary. In 1915 and 1916 they all spoke of it as a “war tax” which implies that it would be gone when the war was over. You could call this a promise by implication. During the war they actually borrowed a lot of money, and so after the war they decided that it was legitimate to keep the income tax in order to pay back the money they borrowed so we could sort of say it was still a “war tax”, and they also figured there was rebuilding to do after the war, repatriating the old soldiers, etc, and one way or another they kept coming up with ideas for how to spend all this lovely money they kept collecting.

    Little by little they just stopped mentioning it as a war tax, and by the 1920’s they just didn’t mention the war at all… but they kept right on with the tax.

    In the big picture, it was a lie, but in the details very hard to spot where the lie was sneaking in.

    • Reply
      Tel says:
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      A federal government income tax was introduced in 1915, in addition to existing state income taxes, to finance involvement in the First World War. The federal government rates were low and cut in at a high income threshold, minimising double taxation. Following the war, the federal government continued to impose income tax, meaning that two tiers of government were sharing, and competing for revenue from, a common taxation base. The state and federal government taxing systems were kept separate, and administered separately by the different bureaucracies.

      Actually, that’s probably a better quote, for the “war tax” of WWI.

    • Reply
      Bob Murphy says:
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      thanks Tel!

    • Reply
      The Existential Christian says:
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      “In the big picture, it was a lie, but in the details very hard to spot where the lie was sneaking in.”

      Isn’t that how all the best lies are told?

      • Reply
        Tel says:
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        Depending on your definition of “best” in the context.

        I’m sure it worked out well for someone.

      • Reply
        Tel says:
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        Possibly by God’s design, or more likely complete coincidence, but James E. Miller recently posted the following link:

        http://mises.org/daily/2726

        Containing the quote:

        You do not defend a world that is already lost. When was it lost? That you cannot say precisely. It is a point for the revolutionary historian to ponder. We know only that it was surrendered peacefully, without a struggle, almost unawares. There was no day, no hour, no celebration of the event — and yet definitely, the ultimate power of initiative did pass from the hands of private enterprise to government.

  4. Reply
    Joe Beck says:
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    “The Proposed Income Tax – A Poll of the Press”

    Seven arguments for the tax

    The Outlook, May 10, 1913, pp.58-60

    http://www.unz.org/Pub/Outlook-1913may10-00058

    Hope this helps. Do it!

    • Reply
      Bob Murphy says:
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      Awesome Joe Beck! This is fantastic.

      • Reply
        Joe Beck says:
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        Glad that will help ya out. Tom Woods directed me to unz.org for the research competition. You can search for any keyword phrase within a given date range and find ancient articles, newspapers, etc. about any subject. Thank Al Gore for the internet

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