If you read the current drivel on the imposition of tariffs on the Chinese — notorious thieves of intellectual property, currency manipulators, erectors of hurdles to access to their market, a despotic Communist regime — you would think the entire economy is about to explode. Let me give you some facts.
Here’s President Trump putting the squeeze on President-for-Life Xi. Ouch!
Tariffs are taxes, right, Big Red Car?
Yes, dear reader, a tariff is a tax. The USA depended primarily on tariffs from its formation until the first income tax.
The first income tax imposed in the US was enacted in 1861 — 3% on all incomes over $800. It was rescinded in 1872.
In 1874, the US Congress enacted a flat rate Federal income tax that was promptly found to be unconstitutional by the Supreme Court.
The Sixteenth Amendment to the US Constitution, passed in July 1909, papered over this defect, but it wasn’t ratified until February 1913.
A Federal income tax was enacted immediately after ratification and has been enshrined in the funding of the Federal government since then.
Big takeaway — we didn’t really have an income tax until 1913.
So, we lived on tariffs.