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Rachlin Dissertation Deposit Draft From Whatever Source Derived: Wealth, National Citizenship, and the Ratification of the Income Tax Amendment Seth Rachlin Submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Graduate School of Arts and Sciences COLUMBIA UNIVERSITY 2014 © 2014 Seth Rachlin All rights reserved ABSTRACT From Whatever Source Derived: Wealth, National Citizenship, and the Ratification of the Income Tax Amendment Seth Rachlin Debate over the meaning, extension, and proper form of national citizenship is central to American history. This dissertation considers a fundamental obligation of citizenship, the payment of taxes. Focusing on the ratification by the states of the 16th Amendment which made possible the taxation of incomes, it shows how new ideas about the mutual obligations of citizens changed the relationship between Americans and their government with profound consequences for the development of the American state in the 20th century. Ideas of national citizenship contributed to an outcome few at the time expected: 42 of 48 states in a nation steeped in libertarian culture since its founding ratified an amendment awarding the federal government broad, new taxing power. In a detailed analysis of the ratification process in three states – Wisconsin, Virginia and New York – this study demonstrates that ideas about national citizenship structured the politics of ratification. Wisconsin’s position in the forefront of Progressive reform and its adoption of a state income tax during the period under study demonstrate the strong affinities between a "new citizenship" and the income tax, factors which led to easy ratification. Virginia’s rejection of the amendment was exceptional in a region that largely supported the income tax. In Virginia, a plutocratic political machine, tied to Northeastern industrial interests and strengthened by the recent disenfranchisement of the state’s poorer residents, weakened reform efforts and enabled local political elites to ignore the state’s strong economic interest in a potential federal income tax. New York’s first order economic interests suggested that it would be strongly disposed against the amendment. New Yorkers, then 10 percent of the nation’s population, would pay more than 30 percent of an income tax. But unlikely bedfellows among New York’s political leadership put forward a patriotic vision of national citizenship. This vision attracted segments of the economic elite, middle-class reformers, and working-class voters to support ratification. The surprising ratification of the 16th Amendment had profound consequences for American federalism. It meant that a minority of wealthy states now owed more to the federal government than their numbers dictated. It enabled a redistribution of income from wealthy states to poorer states that continues to the present day. Ratification also provides a powerful argument against material reductionism in explaining the nature of tax policy and politics in America. It suggests that moral and social considerations – aspects of a nation’s political culture, expressed in the American context through evolving ideas of national citizenship – can be critically important in explaining significant changes and movements for tax reform. TABLE OF CONTENTS Acknowledgements ............................................................................................................................ iv Introduction ............................................................................................................................................ 1 Taxing Citizens, Not States ........................................................................................................................... 8 More than Tax Reform ................................................................................................................................ 11 The Road to Ratification ............................................................................................................................ 17 Notes ................................................................................................................................................................. 21 Chapter One: The Pre-History of Ratification ........................................................................... 25 In the Service of Union ................................................................................................................................ 30 A Protest Tax .................................................................................................................................................. 36 A Tax for the New Century ......................................................................................................................... 45 “From Whatever Source Derived” .......................................................................................................... 52 In the Service of a Renewed Nation ........................................................................................................ 55 Figures ............................................................................................................................................................. 57 Notes ................................................................................................................................................................. 60 Chapter Two: Taxing the (Common) Wealth: Wisconsin ...................................................... 65 Midwestern Insurgency and the Income Tax ...................................................................................... 66 Political Economy and the Tariff ............................................................................................................. 74 Local Tax Reform .......................................................................................................................................... 84 Political Reform and Citizenship ............................................................................................................ 93 An Exemplary Convergence .................................................................................................................... 102 Tables ............................................................................................................................................................. 105 i Notes ............................................................................................................................................................... 109 Chapter Three: Rejection in the Old (Yankee) Dominion ................................................. 115 Breaking with the South on the Income Tax ..................................................................................... 117 Political Economy and the Tariff ........................................................................................................... 123 Good for the State, Not the Nation ........................................................................................................ 131 The Limits of Political Reform and Citizenship ................................................................................ 142 The Pride of the Yankees ......................................................................................................................... 151 Figures ........................................................................................................................................................... 155 Tables ............................................................................................................................................................. 156 Notes ............................................................................................................................................................... 162 Chapter Four: The American Empire and the (Empire) State .......................................... 168 Divided Between State and Nation ....................................................................................................... 170 Political Economy and the Tariff ........................................................................................................... 176 Keeping the Money at Home ................................................................................................................... 184 Political Reform and Citizenship .......................................................................................................... 192 Of State and Nation .................................................................................................................................... 205 Tables ............................................................................................................................................................. 207 Notes ............................................................................................................................................................... 212 Conclusion ......................................................................................................................................... 220 The Political and the Fiscal ..................................................................................................................... 222 Bringing Wealth into Balance ................................................................................................................ 226 Social Science Perspectives
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