Clint Wallace, University of South Carolina

The populist income tax refers to the short-lived U.S. law that was enacted in 1894 at the behest of members of Congress who identified as populists. The tax was motivated by two distinctive concerns, one focused on efficiency, and another focused on democracy. First, populists advocating for the income tax were informed by an argument in favor of targeting the “unearned increment” from investments. While the conventional case against the income tax in that era—and in favor of the existing tariff regime— was tenuous in terms of economics (even by the standards of the day, and moreso through a contemporary lens), the populists’ rhetoric related to taxing so-called unearned gains (rents in modern parlance) reveals a surprisingly sophisticated concept of efficiency. Second, the tax reform movement was infused with a very particular concern about inequality and democracy: specifically, that wealth inequality was stunting democratic decision making. This point was evidenced in the popular imagination by industrialists using their unfathomably enormous wealth to direct government to their own purposes, including in the efforts to fight tax reform, which succeeded in 1895 when the tax was declared unconstitutional by the U.S. Supreme Court. The prevalence of these arguments—which receded from progressive tax policy discourse after the ratification of the Sixteenth Amendment restored Congress’ authority to tax income—reveals that the populist income tax not the crude redistributive cudgel that the reputation of populist movements perhaps suggests. I argue that the populist income tax also was not simply the beginning of the standard story of the progressive income tax in America. Rather, the political and intellectual origins of the income tax show a distinct conception of tax policy as a tool for democratic reform, which I offer as a point of contrast with contemporary tax policies in the U.S. and beyond, as well as with the standard frameworks for analyzing tax policy that would emerge in the twentieth century.