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In defense of the income tax, a history

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“It began with an earthquake,” writes Jill Lepore in this week’s New Yorker.

That’s not a metaphor. In 1906, an earthquake struck San Francisco, and started a massive fire that nearly burned the city down. As Lepore writes, it was one of the worst natural disasters in American history. Economic panic followed. The New York Stock Exchange almost shut down.  The government desperately needed revenue.

The solution? The income tax. By 1913, Congress ratified the 16th amendment to the Constitution, approving a levy on personal income. At the time, Lepore writes, it wasn’t that controversial. But that doesn’t mean we’ve ever liked it.

“Opposition to taxation has been very effectively sold. There hasn’t been a very well organized defense of it,” says Lepore.

She quotes Oliver Wendell Holmes: “Taxes are what we pay for civilized society.”

But, says Lepore, “Nobody has really said that better than Oliver Wendell Holmes — and that was nearly a century ago.”

Even proponents of the New Deal avoided linking taxes to popular social programs.

“Liberal policymakers very deliberately refused to defend what they were doing as a kind of progressive income tax that would be for the good of all. To defend it that way would be to open themselves up to further political attack by these well-organized political forces that opposed income taxes at all. And so they were never defended as the fruit of an income tax,” Lepore says.

Lepore offers a possible defense of her own.

“Taxes protect private property and protect the environment. Without taxes business is impossible. You can make a business-based argument to defend progress income taxation. But one way not to do it is to engage in the rhetoric of marketing.”

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