Taxes, Prohibition, and Politics

by Don Boudreaux on April 13, 2006

in Archaeological Economics, History, Politics

With April 15 fast approaching, I reflect on taxes.

Did you know that the modern federal income tax in the United States was a chief cause of alcohol prohibition here (from 1920 through 1933)?  In a 1994 paper in the Arizona Law Review Adam Pritchard (now on the law faculty at the University of Michigan) and I found that the income tax did indeed play this pernicious role.

We found also that a genuine silver lining around the dark cloud of the Great Depression was prohibition’s repeal.  This repeal had next to nothing to do with prohibition’s ineffectiveness and almost everything to do with Uncle Sam’s desperation, in the early 1930s, for additional tax revenue.

My and Pritchard’s paper is summarized here.

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{ 2 comments }

John J McDermott April 15, 2006 at 10:02 am

The the U.S.S.R.had the same solution!

Walt from Mid-Michigan March 6, 2007 at 2:31 pm

Could we not tax pot to pay for the babyboomers oncomoing oldness, and let the rest of us opt out?

Great blog!

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