In a message dated 1/16/03 8:47:15 PM, [EMAIL PROTECTED] writes: >This brings to mind an historical point which has been tugging at me - >perhaps someone here will know the answer offhand. Has there *ever* been >an instance where one type of tax has entirely replaced another, or even >replaced in some 'revenue-neutral' fashion for even a few years, the tax >it is proposed to 'replace'?
Well I won't say "never," but I know of no such case in American history. Typically Congress passes some new tax or taxes during a war, then sometimes the new taxes persisted after the orginal justification for them had passed. During the Civil War Congress raised tarrifs drastically, and imposed an income tax and an inheritance tax. After the war it let the income and inheritance taxes lapse, but kept the higher tariffs. The new tax regime was weighted much more heavily toward tariffs than the previous system, which relied proportionately more on "internal" excises, but Congress had used both types to a fair degree before, and tariffs did not replace excises. Likewise during World War I the income tax of 1913, which had raised little revenue at its inception, replaced tariffs as the single largest source of federal revenue, but it didn't replace tariffs, and indeed, during the 1920s shrunk back below 50% of federal revenue. While the income tax burst onto the scene rather suddenly as a major source of revenue (as it had during the Civil War) it just didn't replace another source of revenue entirely. Even today the federal government still collects revenue from tariffs (and excises). So Susan raises an excellent historical point I hadn't really considered in discussing alternatives to the income tax: there's never been a sudden wholesale replacement of one major source of federal revenue for another. I've always thought it was an unlikely prospect anyway, and now I'm clearer as to why. DBL
