How the New Deal Soaked the Rich, Middle Class, and Poor
by Jim Powell, March 31, 2009
The New Deal was paid for mainly by the middle class and the poor. This was because excise taxes were the biggest revenue generators for the federal government. They applied to beer, liquor, cigarettes, chewing gum and other cheap pleasures enjoyed disproportionately by the middle class and the poor. Until 1936, excise taxes generated more revenue than the federal personal income tax and the federal corporate income tax combined. Not until 1942 — in the middle of World War II — did the federal personal income tax become the biggest revenue generator for the federal government.

FDR pushed for higher excise taxes during his hallowed first Hundred Days. First came liquor excise taxes. Congress had already (February 20, 1933) passed a bill to repeal federal prohibition of alcohol in 19 states without Prohibition laws, and when this bill was ratified by the states, Washington would immediately began to collect liquor excise taxes — those taxes had never been eliminated.

To raise even more money from the sale of alcoholic beverages, FDR secured passage of the Beer-Wine Revenue Act on March 22, 1933. The following year, on January 11, 1934, Congress passed the Liquor Taxing Act which nearly doubled the excise tax on distilled liquor from $1.10 per gallon to $2, and the wine excise tax was substantially increased as well. In addition, there was a $5 per gallon tariff on imported alcoholic beverages, and FDR wasn’t about to eliminate that. Besides liquor excise taxes, FDR raised excise taxes on tobacco and gasoline.

There were more taxes during the Hundred Days. The National Industrial Recovery Act imposed a 5 percent tax on corporate dividends, and it reduced deductions for business and capital losses. The Agricultural Adjustment Act added a tax on food processors like millers which ground wheat into flour, and there were special punitive taxes on farmers who produced more than the government permitted; for instance, 33-1/2 percent of the value of tobacco above quota and 50 percent of the value of cotton above quota was taxed. Finally for 1933, there was a 5 percent tax on corporate net income above 12 percent of a corporation’s capital stock.

All this was just for openers. The Revenue Act of 1934 raised taxes on people making more than $9,000. In addition, there wasn’t any provision for carrying forward net losses to future years — while FDR wanted to share in everybody’s capital gains, he didn’t want to share their losses. FDR increased the estate tax to 60 percent. And as if FDR hadn’t learned anything from Hoover’s disastrous experience with the Smoot-Hawley tariff, the Revenue Act of 1934 introduced tariffs on coconut and other oils imported from the Philippines (a goody for farm lobbyists).
Please below an excerpt from one of many bi-lines online about Obama possible doing this too?

Would that not also Cause another Great Depression? Why Would Obama duplicate a failed policy?
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In his January 1935 budget message, FDR had promised that there wouldn’t be any new taxes, but on July 19, 1935, he suddenly demanded new taxes. He expressed his view that the Great Depression was somehow caused by private wealth:

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Filed under: Alcohol Depression Causes

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