Comment Re:Been there. Done that. (Score 5, Informative) 841
Before 1913 the Federal government collected duties on good entering the country and tariffs on certain goods. However the amount of collected is very small and easily avoided by any person choosing to vote against Federal policies by not buying dutiable goods.
The nation had few taxes in its early history. From 1791 to 1802, the United States government was supported by internal taxes on distilled spirits, carriages, refined sugar, tobacco and snuff, property sold at auction, corporate bonds, and slaves. The high cost of the War of 1812 brought about the nation's first sales taxes on gold, silverware, jewelry, and watches. In 1817, however, Congress did away with all internal taxes, relying on tariffs on imported goods to provide sufficient funds for running the government.
Read more: History of the Income Tax in the United States | Infoplease.com http://www.infoplease.com/ipa/A0005921.html#ixzz2mwDj6t23
Under some circumstances the Federal income was collected from the individual States, such as:
The direct tax of 1798 imposed taxes on “lands, houses and slaves” totaling $2 million over the next two years, apportioned to states in amounts according to representation (as measured in the U.S. census).
http://www.thenewamerican.com/culture/history/item/14268-before-the-income-tax
States placed taxes on real property some of this money was apportioned to the Federal government based on the population of State, hence the need for the census. Along with the money collected each State was represented by two seats in the US Senate. It is important to note that before 1913 these Senators were chosen by each States elected body not necessarily by general election. While congress has always been directly elected and always the origination of bills of appropriations.
The people are taxed and in return the people ask for stuff. The State which took the money with difficulty attempts to limit spending via the Senate which can only approve or deny an appropriations bill. Hence money collected with difficultly and spent with difficultly designed to naturally limit unnecessary spending.
Before 1913 taxes on Income (or any direct tax) was seen as unconstitutional because the Founders felt it was important for people to have a way to protest a government in the only meaningful way: deprive the government of income.
In addition the Founders were distinctly against a privately held central bank such as the Federal Reserve which was also approved in 1913. This has additionally provided the Federal government an essentially unlimited supply of money with which it can enforce any position without any realistic opposition of the individual States.
Post 1913 we can clearly see what happens in a democracy with the effective restraint on spending removed.
