By Matthew
Dunn
If there ever was someone who
qualifies as a power broker it would be Grover Norquist. Norquist is the founder and President of the
Americans for Tax Reform advocacy group.
This group advocates for public officials to sign the Taxpayer
Protection Pledge, in which elected public officials put in writing that they
will never raise taxes.[1] If public officials ever rescind this pledge,
then the Americans for Tax Reform, will aggressively campaign against
them. Norquist and his group have become
immensely powerful, as almost all members of the Republican Party have signed
his pledge.
Norquist would like to be able to
shrink the federal government to where it could fit in a bathtub. He believes that the federal government
today, abuses its power and uses tax money to do fund its efforts. Norquist believes that the United States
government functioned very well when its spending and taxation levels were
around 8% of GDP which was last achieved around the turn of the 20th
century. Without federal income tax, the
government could not operate such programs as social security and
medicare. However, Norquist believes
that individual initiative would better serve the problems that these programs
were intended to help.[2]
Indeed Norquist’s historical information is very
correct. The government had much less
ability to tax up until 1913. In 1913,
the 16th Amendment to the Constitution was passed, which allowed
Congress to directly tax the income of citizens. Over
the course of the rest of the 20th century and beyond, the Federal
Government would take much more of a role in governing the nation. So as Norquist believes that we would be
better served by the taxation levels of the United States before the passage of
the 16th Amendment, I thought it would be interesting to examine
some current issues, and see if the nation was better served during this time
period as well as examining taxation issues before and around the 16th
Amendment.
Tariffs, Labor, and Finance
As the United States always needed
some kind of funding for its government, before a national income tax was
created, the main system of funding relied on tariffs. Tariffs are taxes on imported goods. Until the time period after World War II, the
United States had very high tariff rates, as a way of funding the national government. In addition to this, tariffs were used to
prevent foreign competition, as imported goods would be made more expensive by
U.S. tariffs, therefore giving people an incentive to buy domestically made
U.S. products. Tariff rates on foreign
goods were roughly 57% in 1897, making it one of the highest rates in the
world.[3]
High tariffs were one of the ways that the United States began to become one of
the largest industrial centers of the world.
However, being a domestic industrial
power had some negative consequences for the owners of large industry. One of the major ones was the aggressiveness
of labor. In the years around the turn
of the century, labor unions became large and organized a great deal of
strikes. When times got tough for
corporations, they usually cut wages and employees and this would usually lead
to labor related violence. Massive
strikes, rarely seen today, were common during this period. The railroad and steel industries were
particularly prone to strikes, and strikes would often lead to huge shutdowns
and interruptions in production.
Although, many of the strikes were put down, labor’s power began to
grow, and one could say that around the turn of the century, labor unions
became a force in national politics.
In today’s world, labor unions are
on the decline. One of the major reasons
is that corporations and other large companies have the ability to export their
labor to countries that offer lower cost labor.
Today’s world is generally governed by low or non-existent tariffs,
which allow them to continue to sell cheap consumer goods, even if they are
manufactured elsewhere.
This brings a predicament when it
comes to views like those of Grover Norquist.
As his group would love to have a government which did not have the
power to tax, where would even the 8% of GDP for government spending come
from. One can’t imagine that Norquist
supports a return to protectionist tariffs, because free trade has been
supported and championed by Republicans for several decades.
What Norquist doesn’t have is a
sense of history. Perhaps this is
because essentially his pledge against taxes is a marketing strategy. In fact if he studied history, he would find
that much of the roots of what he rails against as big government, was
connected to the early history of the Republican Party. Lincoln was responsible for passing large
tariff increases, and actually instituted the first income tax levy as a way to
pay for the Civil War. In fact
Republicans have always been thought of as the party of business, and there was
a time in our history, when tariffs made sense for business as a way of
reducing their competition from foreign competitors.
Norquist is a symptom of what is
wrong with Congress at this time. His conservative
advocacy group is one of the reasons why Congress always seems to be so
deadlocked. If Congress ever decides
that they want to get something done, they need to ignore the rhetoric and
marketing of people like Grover Norquist, and start reading their history
books.
[1]
Americans for Tax Reform “About the Taxpayer Protection Pledge.” ATR.ORG. http://www.atr.org/about-the-pledge
(accessed December 24, 2014).
[2] 60
Minutes “Grover Norquist’s Hold on the GOP.” CBSNEWS.COM. http://www.cbsnews.com/news/the-pledge-grover-norquists-hold-on-the-gop-29-11-2011/2/
(accessed December 24, 2014).
[3]
Hobsbawm, Eric. The Age of Empire:
1875-1914. New York: Pantheon
Books. 1987. Pg 39.
