February 27, 2013
Mehrotra: How the Income Tax Created the Modern Fiscal State
Bloomberg op-ed: How the Income Tax Created the Modern Fiscal State, by Ajay K. Mehrotra (Indiana):
Before the income tax, the two main sources of federal revenue were tariffs and excise taxes, both of which fell disproportionately on the backs of ordinary Americans, and neither of which could meet the growing demand for government revenue. Reformers embraced a progressive income tax because it solved both these problems. ...
As we commemorate the centennial of the 16th Amendment and look ahead to looming budgetary battles, we ought to keep in mind that the foundations of our modern fiscal state are rooted not in efforts to radically redistribute wealth, but in attempts to balance fiscal duties and civic responsibilities. The progressives who bequeathed this state to us certainly knew the difference.
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