income taxes, tariffs, and henry george--5/11/2026

11 May 2026

income taxes, tariffs, and henry george--5/11/2026

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Today's selection-- from The Price of Democracy by Vanessa S. Williamson. American debates on the proper method of taxation:

“In a society so marred by extreme inequality, the appeal of instituting an income tax was self-evident. Public anger was stoked by journalists' and scholars' exposes of the new poverty and the new wealth–and especially by the revelation that the owners of immense fortunes paid next to nothing in taxes.

“In fact, the federal tax system exacerbated the rapid concentration of money and power. In the late nineteenth century, more than half of federal revenue came from the tariff, the schedule of duties applied to foreign goods imported to the United States. Tariffs raised prices, which hurt poor consumers, especially farmers who paid for protected goods yet received little benefit for the products they grew. The tariff also insulated domestic industries against foreign competitors, enriching the owners of the big corporations that were clustered in a handful of Northeastern states. Modern analyses suggest that the tariff redistributed to its beneficiaries as much as 8 percent of the nation's gross domestic product. But even at the time, the impact of the tariff was widely recognized. Political economist and lawyer Thomas Shearman made headlines in 1889 when he calculated that wealth in the United States was more unequal than in aristocratic England–and cast the blame on the tax system. 'In no other country,' Shearman wrote, 'has the burden of taxation been cast so exclusively upon the working class, or the machinery of public taxation been used so unscrupulously for private profit.' As muckraking journalist Charles Edward Russell put it, 'The root of the evil was the accursed tariff. Under its operation the wealth that should be for all was seized by the favored few.' For its role in corporate consolidation, the tariff became known as 'the mother of trusts.'

“Republicans from the industrial Northeast recognized the tariff's political weaknesses and worked to shore up support for it. They argued that the benefits of the tariff trickled down to industrial workers–but in an era of vicious strikebreaking, the idea that big business was looking out for its workers was not terribly convincing. Republicans also added duties to some farm goods, like wool, to protect agriculture as well as industry. On many products, however, American farmers could compete without trade protections, so this did little to muster support for the tariff. Most significantly, Republicans spent the embarrassingly large sums raised by the tariff on military pensions for Union war veterans, providing a safety net to hundreds of thousands of Americans decades before the welfare programs of the New Deal. 13 But even this policy was not enough to make the tariff widely popular. Union pensions did nothing to increase tariff support in the former Confederate South, or among recent immigrants in Northern cities. And if Union veterans were committed to protecting federal revenue, many were happy for that money to come from a more progressive tax than the tariff.

Georgist single tax poster published in The Public, a Chicago newspaper (c. 1910–1914)

“In the campaign to reduce or eliminate the tariff, the income tax was not the only tax proposal that found popular favor as an alternative source of revenue. By the early twentieth century, more than thirty states and the federal government had experimented with a tax on inheritance. Another proposal involved taxing lands held by speculators–an idea that had been popular with agrarians since the country's founding.

”No tax proposal, however, encouraged fanaticism quite like Henry George's 'single tax,' a proposal to replace all other taxes with a tax on the unimproved value of land. George's 1879 book on the topic, Progress and Poverty, sold millions of copies, inspired the formation of hundreds of 'Single Tax' clubs, and in 1886 pushed George to a solid second-place finish in the race for mayor of New York City (in which he outpolled the Republican, Theodore Roosevelt). Several utopian colonies were founded on the basis of the Georgist tax. The single tax was, in the words of historian Ajay Mehrotra, 'a kind of flypaper for social movements.'

“The single tax was a digression in the history of American taxation, but it was so popular that we should digress as well, and consider why a tax plan could provoke such fervor. There is nothing so terribly wrong with the variation on a property tax that was the sole demand of the Georgist movement; some localities impose a similar tax today. However, to balance one's entire fiscal edifice atop one narrow tax, particularly one applied to something as unstable as land values–that is where the Single Taxers tipped into crackpottery. But committed Georgists believed that the single tax was a panacea: a way to replace every other source of government revenue and singlehandedly eliminate poverty.

“What Georgism offered, other than the appeal of a silver bullet, was a tax that seemed to apply only to the portion of one's wealth that one did not 'earn.' All efforts to improve the land–with buildings or irrigation systems–went untaxed under George's plan. Taxes fell only on the value of the land, and no one could claim to have personally created that value. In rural America, the soil was a gift of nature (or a gift from God, to many religiously inclined 'Citizens). More prosaically, the value of a plot of farmland had everything to do with its access to the railroads and the markets. In the cities, the value of land was even more obviously tied to the society and economy that surrounded it–the roads and sewers, the parks and schools, the stores and neighbors. The emotional appeal of Georgism lay in a fundamental truth of the industrial world: that wealth was increasingly a social product. This reality, as we will see, was central to the fight for the income tax.

“The income tax never provoked monomaniacal zeal on the order of Georgism, but it had substantial advantages, including that it was far more closely tied to the taxpayer's ability to pay and it could raise vastly more money. From the 1870s onward, prominent economists were among the strongest proponents of an income tax. The income tax had also already been proven successful. Other countries had taxed income for decades; some states had also experimented with income taxes. A federal income tax was proposed as early as the War of 1812 and, of course, had served as an effective source of revenue during the Civil War.”