Whiskey Rebellion: A Rebellion against Taxes?

Posted on March 25, 2013November 28, 2015 by David Meyer

The history of the Whiskey Rebellion is shrouded in myth. Many scholars consider it a victory for the young U.S. government. But was it really a win for the anti-tax patriots?

What caused the Whiskey Rebellion?

The Whiskey Rebellion was the second major internal uprising in U.S. history (preceded only by Shays’ Rebellion). It was a response to an excise tax created by Alexander Hamilton, who served as Secretary of the Treasury under George Washington.

The U.S. government racked up $79 million in debt during the Articles of Confederation period. The Federal government owed $54 million of that amount. The individual states owed $25 million. Alexander Hamilton saw this as an opportunity to centralize government. He proposed to consolidate the debt. In order to pay it back, he would create a tax on domestic spirits. This was seen as a relatively safe luxury tax. In addition, he had support from those who viewed alcohol as a sinful indulgence. Thus, the Whiskey Act was passed into law in 1791.

What happened during the Whiskey Rebellion?

The Whiskey Tax was extremely unpopular, especially on the frontier (back then, the frontier consisted of Kentucky as well as parts of Pennsylvania, Maryland, Virginia, North Carolina, South Carolina, and Georgia). Many people in these areas just refused to pay the tax. But in western Pennsylvania, protestors fought back.

In July 1794, more than 500 people attacked the tax inspector’s home. George Washington sent a massive militia, 13,000 people strong, to quell the rebellion. By the time the militia arrived, the rebellion had dispersed. Some 20 people were arrested, but no one was ever convicted of a crime.

Guerrilla Explorer’s Analysis

Many scholars consider this a victory for the federal government. In his book, Character: Profiles in Presidential Courage, Chris Wallace provides a fairly typical pro-state treatment:

By acting decisively to quell the threat, Washington had proven that the federal government would stand behind the law. Many continued to fear that the government would destroy their dearly purchased freedoms. But as President Washington noted in his farewell address, a strong government, not a weak one, was the “main pillar…of your tranquility at home; your peace abroad; of your safety; of your prosperity; of that very Liberty which you so highly prize.”

However, the true story of the Whiskey Rebellion lies elsewhere, namely in the frontier. The U.S. government was never able to collect the Whiskey Tax on the frontier. In fact, it hardly tried. In fact, the Whiskey Rebellion, by and large, was mostly a non-violent tax protest. People just refused to pay it. Eventually, Hamilton and his fellow Federalists lost power and all excise taxes were repealed.

Here’s more on the Whiskey Rebellion from Murray Rothbard at LewRockwell.com:

The Whiskey Rebellion has long been known to historians, but recent studies have shown that its true nature and importance have been distorted by friend and foe alike. The Official View of the Whiskey Rebellion is that four counties of western Pennsylvania refused to pay an excise tax on whiskey that had been levied by proposal of the Secretary of Treasury Alexander Hamilton in the Spring of 1791, as part of his excise tax proposal for federal assumption of the public debts of the several states.

Western Pennsylvanians failed to pay the tax, this view says, until protests, demonstrations, and some roughing up of tax collectors in western Pennsylvania caused President Washington to call up a 13,000-man army in the summer and fall of 1794 to suppress the insurrection. A localized but dramatic challenge to federal tax-levying authority had been met and defeated. The forces of federal law and order were safe.

This Official View turns out to be dead wrong…

(See the rest at LewRockwell.com)

Did the U.S. Government kill Big Bands?

Posted on March 20, 2013November 27, 2015 by David Meyer

In 1935, Benny Goodman launched the Big Band era with a famous performance in Los Angeles. By 1946, the Big Band era was dead. Despite high popularity, it was replaced by the far less dance-friendly (and far less popular) BeBop era. What happened to the Big Band era?

The U.S. government holds a substantial part of the blame. In 1944, the U.S. government imposed the so-called “Cabaret Tax,” partly to raise funds for World War II. Essentially, it placed a 30% tax rate on all establishments that “contained dance floors, served alcohol and other refreshments, and/or provided musical entertainment.” The tax, like so many others, was supposed to be temporary. But when it was reinstated, dance halls closed across the nation. Thanks to the extra cost of doing business, few places could afford to hire big bands. Thus, many big bands were forced to break apart. Musicians formed smaller bands and started playing non-danceable music. Thus, the era of Bebop began. Here’s more on the government’s war on Big Bands by Eric Felten at The Wall Street Journal (paywall protected):

These are strange days, when we are told both that tax incentives can transform technologies yet higher taxes will not drag down the economy. So which is it? Do taxes change behavior or not? Of course they do, but often in ways that policy hands never anticipate, let alone intend. Consider, for example, how federal taxes hobbled Swing music and gave birth to bebop.

With millions of young men coming home from World War II—eager to trade their combat boots for dancing shoes—the postwar years should have been a boom time for the big bands that had been so wildly popular since the 1930s. Yet by 1946 many of the top orchestras—including those of Benny Goodman, Harry James and Tommy Dorsey—had disbanded. Some big names found ways to get going again, but the journeyman bands weren’t so lucky. By 1949, the hotel dine-and-dance-room trade was a third of what it had been three years earlier. The Swing Era was over.

Dramatic shifts in popular culture are usually assumed to result from naturally occurring forces such as changing tastes (did people get sick of hearing “In the Mood”?) or demographics (were all those new parents of the postwar baby boom at home with junior instead of out on a dance floor?). But the big bands didn’t just stumble and fall behind the times. They were pushed…

(See the rest at The Wall Street Journal)

Happy Birthday Income Tax (Now, go away already!)

Posted on February 4, 2013November 25, 2015 by David Meyer

It’s been one hundred years since the modern income tax was created, via the 16th Amendment to the U.S. Constitution. Back then income tax rates ran from 1% for annual incomes over $3, 000 to 7% for annual incomes over $500,000 (that’s $11.6 million in today’s dollars!). Current tax rates run from 10% to 39.6%. Meanwhile, the income tax code has gone from a hefty 400 pages to a whopping 44,000 pages. My how times have changed. Here’s more from Delaware Online:

Pop Quiz: What book has more than 7 million words in multiple chapters, attempts to influence our behavior toward good ends, is complex and often contradictory, and requires interpretation by learned studiers of its texts to distill its basic principles for the masses of us for who this tome is supposed to provide benefit? It’s not the King James version of the Bible. It’s the current United States Tax Code.

The giveaway: While the U.S. Tax Code has more than 7 million words, The Bible is a relatively slim pamphlet at only 774,746 words. It wasn’t always this way. In 1913, the year the personal incomewe now labor under was instituted, the number of pages contained in the entire Tax Code stood at 400 (most of those dealing with tariffs). The Bible actually was longer at 1,291 pages.

As of 2010, the United States Tax Code stands at a whopping 71,684 pages (according to CCH Standard Federal Tax Reporter, though in fairness, that includes repealed or modified portions of earlier versions of the tax code. The current, live portion runs a mere 44,000 pages.) The original 1913 Tax Form 1040 blissfully topped out at a rate of 7 percent – the “fair share” due of the uber rich in the eyes of then President Woodrow Wilson who obviously never had been a community organizer at any point in his career…

(See the rest at Delaware Online)