16 th and 18 th Amendment
Sixteenth Amendment Civil War: debts caused Congress to enact first federal income tax. Based on ability to pay – only people above a certain income level were expected to pay. The government relied on voluntary compliance with the income tax. Less than one percent paid, yet it generated $55 million. It was repealed in 1872
1890s – tariffs and excise taxes were used 1900s – government starting to support more people than ever (industrialization and modernization). Many people are poor – Congress proposed an income tax that would not be based on the population of the states. Ratified in Allowed the government to tax people directly. First tax was limited: applied to 2% of workforce and highest rate was 7% Collected by IRS
Who pays and how much? More income = higher percentage to pay
Arguments for and against For: We need it to support all of the governmental programs: school, welfare, parks, roads, army, post offices, etc… Against: Originally Constitution said that Federal Government can not collect taxes from citizens. They can only take from the states according to their population. They are allowed to use tariffs, excise taxes, and consumption taxes. - States should pay for own welfare, health, education, transportation, and housing
Questions Is a direct tax on a worker’s income fair? A progressive tax means that the rich are taxed a higher percentage of their wealth than the poor. Is this fair?
Prohibition 18 th Amendment, 1919 Prohibited manufacturing, sale, and transportation of alcohol within the United States.
Why? Many thought it would protect society from poverty and violence associated with drinking Most support came from women and country folk This caused brewery and liquor interests to oppose women’s suffrage States had already passed prohibition laws before. “Un-American” during WWI to be for alcohol – need to save resources
What Happened Americans were very resourceful at finding alcohol Black market and various mobs and mafias became huge 18 th Amendment repealed with 21 st Amendment in 1933
Questions Should we have prohibition today? What about the war on drugs? Is it worth it?