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TAXATION IS THEFT: Lessons from the Whiskey Rebellion

June 5, 2013

Students of North American history have much to learn about the Whiskey Rebellion and what actually happened in order to understand the importance of organized resistance to so many unnecessary taxes today. The Whiskey Rebellion was not confined to a revolt in western Pennsylvania, instead, evasion of the tax was evident in Kentucky and the frontier regions of Virginia, Maryland, and North and South Carolina. I am getting ahead of myself here though. Some of you who are not history buffs maybe wondering what the heck was the Whiskey Rebellion all about and why should I care?

In 1791 the federal government imposed a 25 percent tax on whiskey, to be paid by the producer at the point of production rather than by the consumer at the moment of purchase. This is an example of the United States federal government’s history of penalizing production via a tax much like today’s income tax. Back in the 1700s however, people were more alive and aware about such matters and discontent abounded. For decades the frontier regions had seethed with frustration and resentment. The eastern portions of their states were unfamiliar with and unconcerned about their peculiar difficulties, frontiersmen alleged, and the states’ systems of representation gave the east disproportionate influence in state government. People on the frontier also believed that the unique sacrifices they had to make and the particular dangers to which they were exposed–and against which they received little to no assistance from state government–ought in all fairness to entitle them to exemption from at least some portion of the regular tax burden. Generally speaking, taxes always does more damage to the productive sectors of our society. By the end of the eighteenth century serious secession movements had developed throughout the frontier, a trend only partially diminished by the admission of Kentucky and Vermont, formerly frontier regions themselves, to statehood.

What the federal government essentially did was tax the only product that Kentuckians and other frontier regions could sell at a profit without effective methods of transporting it to the east and much less access to foreign markets. Whiskey was such an important commodity to the well-being of the frontier economy that it even substituted for specie as a medium of exchange. A tax on it would be unusually disruptive and burdensome and it would be essentially stealing their wealth and productivity.

While the federal government was conveniently taxing Kentuckians’s most important good, they did nothing to provide defense against the Indians, which was a constant problem on the frontier. Now I am not advocating seeking the help of the federal government to deal with issues of personal defense, but how can a government have its cake and eat it too? You are either taxing citizens because you are a benevolent government who is going to use those funds for the good of society or you are just a criminal organization stealing other people’s wealth. Another example of where the federal government would conveniently tax its citizens but do nothing to help their regional economy is in the lack of interest in securing navigation rights on the Mississippi River from Spain, which was resulting in expensive transportation for the locals. And people think that the federal government would not allow foreign governments to take over parts of the US without regard to us? You need to read how the Americas was founded. You need to read how most of our rebellions and revolutions was due to taxation going back to the Stamp Act of 1765.

The federal government hardly knew what to do in the face of the massive civil disobedience that ensued and as a result Alexander Hamilton hid from the rest of the country the extent of tax evasion outside of western Pennsylvania. Did you know that in most other backcountry areas, almost no one enforced the whiskey tax? So for all practical purposes it was neither collected nor paid. It makes you wonder how and why small and medium sized businesses who claim to care about people behave like good little sheeple and W-4 its employees so that the federal government can get their piece of their income and then turns around and taxes its customers on items purchased. Even during the Stamp Act of 1765 the population dissuaded people from serving as stamp agents and collecting taxes. We need to dissuade people from working for the IRS.

Government only knows violence and theft but it cant perpetrate violence and threat when they are outnumbered. The Whiskey Rebellion did not amount to a victory for the federal government. Evasion of the tax remained widespread throughout the frontier regions, and those tax delinquents who eventually came clean did so only after receiving assurances that the tax would be repealed. Following the election of Thomas Jefferson in 1800, the federal government abandoned the whiskey tax altogether and avoided the use of excise taxes during peacetime until after the War Between the States. Until then the federal government’s entire revenue derived from only two sources: a protective tariff and the sale of public lands. I say we push back the clock and make that the only two sources of the federal government’s entire revenue again.

The Whiskey Rebellion was one of the great movements of civil disobedience in North American history. Maybe just maybe, you think that in the history of the whiskey tax we can learn what to do about the Internal Revenue Service?

 

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From → Economics

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