by Jesse Eisinger

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In his Rose Garden speech launching a global trade war by announcing the most sweeping tariffs in modern history, President Donald Trump bestowed a history lesson on his audience that diverged from the factual record:

“Then in 1913, for reasons unknown to mankind, they established the income tax so that citizens, rather than foreign countries, would start paying the money necessary to run our government. Then in 1929, it all came to a very abrupt end with the Great Depression, and it would have never happened if they had stayed with the tariff policy; it would have been a much different story.”

So why did we institute an income tax? Were there any humans who knew what the reasoning was? And did the actions of 1913 lead to the Great Depression in 1929?

There is a clear consensus among historians on these points. No, the income tax was not a mistake.

But it was something stranger: both a 40-year struggle and an accident.

In 1913, the states ratified the 16th Amendment, which gave the federal government the power to “collect taxes on incomes, from whatever source derived.”

This was not the first income tax effort, however.

For a few short years during and after the Civil War, the United States imposed its first tax on income to help fund the massive costs of the war. Placed on relatively high incomes but only collecting a modest percentage, it was cast as both a way to generate needed revenue and a way to maintain fairness.

Yes, that’s right, one of the chief selling points of taxing income was that it was a way of achieving “equity” in the burdens of the war. Responding to allegations that only poor men were fighting and dying, President Abraham Lincoln and his Republican Party made sure the law required that the taxes people paid would be publicly disclosed. Unsurprisingly, the wealthy men of the dawning Gilded Age did not like seeing their tax information in the pages of The New York Times. Wealthy interests forced a repeal of the income tax in 1871, and the federal government returned to funding itself with proceeds from user fees and tariffs.

Efforts to rein in the rich persisted, however. Congress moved in 1894 to reintroduce an income tax. The populist Kansan politician William Jennings Bryan gave a famous speech on the floor of Congress. Responding to the argument that the wealthy would leave America if they had to pay such a tax, then proposed as 2% on the top incomes, he said:

“Of all the mean men I have ever known, I have never known one so mean that I would be willing to say of him that his patriotism was less than 2 per cent deep. … If ‘some of our best people’ prefer to leave the country rather than pay a tax of 2 per cent, God pity the worst.”

Congress passed the law. One year later, however, the Supreme Court controversially rejected it, 5-4, in the case of........

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