Would an independent Confederacy have a national sales tax as its main source of revenue instead of an income tax?
- Thread starter Jabe Thomas
- Start date
bguy
Donor
I imagine a surviving Confederate States would eventually result in a two party system split between a party comparable to OTL's Bourbon Democrats and a party comparable to OTL's Populists.
The Bourbons would presumably favor a rather minimalist government that did little beyond provide for the national defense and maintaining internal order which they would presumably pay for through a modest "revenue" tariff on imports, a modest duty on exports like cotton and tobacco (the Confederate Constitution explicitly allowed for export duties though obviously the Confederates can't set this too high lest they price their own exports out of the market) and excise taxes on liquor and tobacco.
The Populists would favor a much more activist government that would not only provide for the national defense and internal security but also fund economic development programs and social welfare spending (to assist the low income white population), so their program would obvious require much greater revenue. As such they probably would favor an income tax on the wealthy and a corporate income tax.
Of course a lot is going to depend on Confederate relations with the United States. The worse those relations are the more the Confederates are going to have to spend on national defense and thus the more revenue the government is going to need. If relations are frosty enough then even the Bourbons would probably have to eventually accept the need for income and corporate taxes.
The Bourbons would presumably favor a rather minimalist government that did little beyond provide for the national defense and maintaining internal order which they would presumably pay for through a modest "revenue" tariff on imports, a modest duty on exports like cotton and tobacco (the Confederate Constitution explicitly allowed for export duties though obviously the Confederates can't set this too high lest they price their own exports out of the market) and excise taxes on liquor and tobacco.
The Populists would favor a much more activist government that would not only provide for the national defense and internal security but also fund economic development programs and social welfare spending (to assist the low income white population), so their program would obvious require much greater revenue. As such they probably would favor an income tax on the wealthy and a corporate income tax.
Of course a lot is going to depend on Confederate relations with the United States. The worse those relations are the more the Confederates are going to have to spend on national defense and thus the more revenue the government is going to need. If relations are frosty enough then even the Bourbons would probably have to eventually accept the need for income and corporate taxes.
The Confederate constitution says that the only direct taxes the national government can impose are ones proportional to state populations. Which is basically what the US Constitution says, too, down to slaves counting 3/5s.
Neither a sales tax nor an income tax is legal under those rules.
Of course, the Union ignored that, and the CSA might, too.
OTL, the US passed an amendment to make income tax legal.
I doubt the CSA could get the state ratifications necessary to do the same. But lots of things are possible.
Neither a sales tax nor an income tax is legal under those rules.
Of course, the Union ignored that, and the CSA might, too.
OTL, the US passed an amendment to make income tax legal.
I doubt the CSA could get the state ratifications necessary to do the same. But lots of things are possible.
They'd need to support a big military for decades at least so they'll need to find a way
Going to be rough funding a Confederate military---they're allergic to tariffs, which is how the US mostly did things back in those days. I don't see them liking a federal income tax either. They'd probably be stuck making tax assessments against the states---like paying your dues, proportionate to population, and have the states sort it out individually. I don't know how well that would work.
Fearless Leader
Donor
It's probably worth noting that the Confederate government was incredibly inconsistent. Despite being ostensibly formed out of a desire for "states rights," Richmond was far more tyrannical and trod all over states rights during the American Civil War. Why would this change afterwards? Especially if the North still posed a threat...
bguy
Donor
The Confederate Constitution is actually much easier to amend than the US Constitution though as the Confederate Constitution only requires 2/3 of the states to approve an amendment (unlike the US Constitution which requires 2/3 approval of both houses of Congress and then 3/4 of the states to approve.) And at least IOTL more than 2/3 of the former Confederate states voted to ratify the 16th Amendment, so it's not as though the southern states were completely opposed to the idea of an income tax.
The Confederates did approve an import tariff in 1861. It was based on the US tariffs of 1846 and 1857 and thus was a fairly low tariff, but it shows they weren't completely opposed to tariffs so long as the tariffs were for revenue only.
They also passed a very modest export tariff on cotton in 1861 (1/8 of a cent per pound) which was probably about a 2% rate. (Though all the subsequent attempts to raise the export duty rate failed.)
And at least the US in the 19th century got about half its income from internal excise taxes, so the Confederates should be able to get a similar proportion of their income from taxes on liquor and tobacco so long as they don't enact Prohibition.
Perhaps it’d drive the CSA apart? (After all, under their Constitution isn’t secession legal?)
dcharles
Banned
Not at all. It actually says "permanent union" in the preamble to their Constitution.
Entirely unconstitutional, indeed.
OTOH, they've established precedent that if you don't like what the central government is doing, you can leave, so I suspect some state would, eventually.
Especially since states are stronger in this system, both by design, and by the fact there's fewer of them.