Happy birthday, income tax. One hundred years ago, on Oct. 3, President Woodrow Wilson signed into law the federal income tax that Congress had passed with bipartisan support. Our Congress is celebrating the anniversary with a purely partisan government shutdown to block implementation of a health care law because it slightly increases taxes on rich people.
There is one good thing about the shutdown: it is a reminder of why we needed progressive taxation in the first place.
The original purpose of a progressive tax was to prevent a small minority of super-rich people from holding democratically elected governments hostage to their whims. The first American to argue for progressive taxation, Thomas Paine–yes, that Thomas Paine–thought that democracy could not survive without it. Paine recognized that a king was nothing more than a rich man who inherited enough land and money to buy a whole government. He thought that was reason enough to support a progressive tax on inherited wealth. The Declaration of Independence was a good start, but it was not enough just to declare your independence from the king once. You also had to keep the next would-be king from getting that much richer than everyone else. Otherwise, you would find yourself under the thumb of a new despot.
The argument was purely theoretical–until economic inequality grew so extreme at the beginning of the twentieth century that some Americans thought a new monarchy was actually coming into view. Rich people in some parts of the country were more or less openly using their money to buy favorable legislation. They used that influence to ensure that the tax burden continued to fall most heavily on the poor.
It took an extraordinary coalition of grassroots social movements to get us a progressive federal tax. Today’s tea party Republicans sometimes style themselves as makers and progressives as takers, but the people who gave us the income tax were the real makers, and the real heirs of Tom Paine. They were farmers, who paid more than their share of property taxes, and demanded a federal income tax so that rich city folk would finally pay some taxes, too. They were the industrial workers who literally built the country’s businesses, who saw a federal income tax as a way to relieve the regressive and confusing system of consumption taxes. They were women suffragists who saw “no taxation without representation” as a pro-tax slogan–because once you pay taxes, no one can say you are not entitled to vote. Progressive movements led by farmers, industrial workers, and women put the issue of income taxation on the national agenda, and pushed into office a wave of progressive candidates who ultimately made the income tax into law.
Then the tea party counterrevolution started. In public, rich businessmen decried the progressive social movements as special interest groups, but in private, they hired some of the best organizers from those interest groups to work for their side. In the 1920s, former populists helped to organize a grassroots movement of “tax clubs” that called for abolishing the federal estate tax. In the 1940s, some millionaires hired former progressives to run the grassroots campaign for a constitutional limit on the top income tax rate. In 1950s, a handful of former woman suffrage activists started a national drive to repeal the federal income tax altogether. In 1970s, activists from many of these campaigns came together to lobby for a constitutional amendment limiting the power of Congress to vote on taxes. Activists in several of these movements called their protests tea parties or T parties.
Thanks to the legacy of those campaigns, this time is different. Today’s tea party is far better funded than any of its predecessors–partly because those predecessors won partial victories that rolled back top tax rates, so that today’s radical rich people have more money than ever to spend on politics. Today’s tea party also inherits a toolkit of tactics and policy proposals from its predecessors. Tea party Republicans in this Congress dusted off and re-introduced all of the radical policies proposed by twentieth-century rich people’s movements–from eliminating the estate tax, to abolishing the income tax, to amending the Constitution to limit the taxation of rich people. If the shutdown is successful, it will embolden them to introduce those proposals again.
This history should remind us that the shutdown is not just about passing this year’s budget and it is not just about Obamacare. The most stubborn members of the Tea Party caucus see this battle as part of a long war against all federal taxation of income and wealth. They say that they are fighting for liberty. But the liberty they have in mind is best described by the title of a protest song that activists sang at “T Party” rallies 50 years ago: “Liberty for Me.”
So let the shutdown be a reminder that the best argument for taxing the rich was always the defense of democracy. And raise a glass to the federal income tax. It protects liberty for the rest of us.
Isaac William Martin is a professor of sociology at the University of California – San Diego, and is the author of Rich People’s Movements: Grassroots Campaigns to Untax the One Percent (Oxford University Press, 2013).