<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Joseph J. Thorndike</p>&#xD; &#xD; <p>For Calvin Coolidge, taxes were a necessary evil. And they were most evil when they weren't necessary.</p>&#xD; &#xD; <p>&#x201C;The collection of any taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public welfare, is only a species of legalized larceny,&#x201D; <a href="http://www.presidency.ucsb.edu/ws/?pid=25834">he declared</a> in his first inaugural address.</p>&#xD; &#xD; <p>As a business president, Coolidge was adamant that taxes should be designed to foster growth and prosperity. &#x201C;The method of raising revenue ought not to impede the transaction of business,&#x201D; <a href="http://www.presidency.ucsb.edu/ws/?pid=25834">he said</a>, &#x201C;it ought to encourage it.&#x201D;</p>&#xD; &#xD; <p>In practical terms, this dictum implied tax cuts. When Coolidge became president in 1923, many of the high taxes imposed during World War I were still on the books. Coolidge wanted to cut them drastically.</p>&#xD; &#xD; <p>&#x201C;High taxes reach everywhere and burden everybody," he <a href="http://millercenter.org/scripps/archive/speeches/detail/3806">said after taking office</a>. "They bear most heavily upon the poor. They diminish industry and commerce. They make agriculture unprofitable. They increase the rates on transportation. They are a charge on every necessary of life."</p>&#xD; &#xD; <p>But for Coolidge, the most serious problem with high taxes was moral, not material. High taxes were a threat to freedom. &#x201C;A government which lays taxes on the people not required by urgent public necessity and sound public policy is not a protector of liberty, but an instrument of tyranny,&#x201D; <a href="http://www.presidency.ucsb.edu/ws/?pid=24174">he declared</a>. &#x201C;It condemns the citizen to servitude.&#x201D;</p>&#xD; &#xD; <p>Distributive justice, moreover, was no excuse for raising taxes above the bare minimum. After all, even the rich had rights. &#x201C;We can not finance the country, we can not improve social conditions, through any system of injustice, even if we attempt to inflict it upon the rich,&#x201D; <a href="http://www.presidency.ucsb.edu/ws/?pid=25834">Coolidge said</a>.</p>&#xD; &#xD; <p>Notably, however, Coolidge was not a foe of the individual or corporate income tax. In fact, with a conservative's appreciation for the tried-and-true, he shielded the income tax from the attacks of its enemies and the aspirations of its friends.</p>&#xD; &#xD; <p>In the wake of World War I, some conservative Republicans were eager to replace the income tax with a national sales tax, insisting that the former was un-American and economically dangerous. Democrats and progressive Republicans, meanwhile, were eager to make the income tax an instrument of social and economic control, curbing corporate power and redistributing personal wealth.</p>&#xD; &#xD; <p>In 1921, Treasury Secretary Andrew Mellon led the charge against repealing the income tax, promising instead to cut rates dramatically. Over the course of the 1920s, he helped a series of Republican presidents, including Coolidge, make good on that promise, creating a flatter, less progressive, but altogether less threatening tax.</p>&#xD; &#xD; <p>Ultimately, rate cuts robbed income-tax opponents of their best argument for repeal. This made Coolidge, like Mellon, an unlikely savior for the nation&#x2019;s most progressive tax.</p>&#xD; &#xD; <p>(Joseph J. Thorndike, a contributor to the Echoes blog, is the director of the Tax History Project at Tax Analysts and a visiting scholar in history at the University of Virginia. The opinions expressed are his own.)</p>&#xD; &#xD; <p>To contact the author of this blog post: Joseph J. Thorndike at jthorndike@thorndike.com.</p>&#xD; &#xD; <p>To contact the editor responsible for this blog post: Timothy Lavin at tlavin1@bloomberg.net.</p>&#xD; &#xD; <p>&#xA0;</p> </body> </html>