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How Taxes Enabled Alcohol Prohibition and Also Led to Its Repeal | Tax Foundation
From The Los Angeles Daily News interview with Lynn Novick, Burns’s co-documentarian:
“I had no idea how important liquor was to the federal government,” says Novick. “It started in the Civil War with the levy on beer and whiskey to help fund the war, and it never really went away. Some 30 percent to 40 percent of the government’s income came from the tax on alcohol. So Prohibitionists realized that the only way they’re going to have a ban was through income tax, which was a progressive cause and was really supposed to distribute wealth and to make things equitable during the robber baron era, where the wealth was being accumulated in a very small segment of the population.”
So essentially the Progressives decided to have a ban on alcohol knowing that it would prompt a movement to fund the government through an income tax. Then when prohibition came and they obtained their federal income tax, then they had no real interest in maintaining the prohibition, after which you saw state run liquor stores pop up all over the nation.
So it was a win/win/win for Progressives.
1. They obtained their federal income tax which forever dismantled federalism and the power of the states.
2. Let Prohibition come and fail and later blame it on evangelical Christians.
3. And later more or less corner the market on alcohol with state run liquor stores and higher sin taxes on alcohol.
From The Los Angeles Daily News interview with Lynn Novick, Burns’s co-documentarian:
“I had no idea how important liquor was to the federal government,” says Novick. “It started in the Civil War with the levy on beer and whiskey to help fund the war, and it never really went away. Some 30 percent to 40 percent of the government’s income came from the tax on alcohol. So Prohibitionists realized that the only way they’re going to have a ban was through income tax, which was a progressive cause and was really supposed to distribute wealth and to make things equitable during the robber baron era, where the wealth was being accumulated in a very small segment of the population.”
So essentially the Progressives decided to have a ban on alcohol knowing that it would prompt a movement to fund the government through an income tax. Then when prohibition came and they obtained their federal income tax, then they had no real interest in maintaining the prohibition, after which you saw state run liquor stores pop up all over the nation.
So it was a win/win/win for Progressives.
1. They obtained their federal income tax which forever dismantled federalism and the power of the states.
2. Let Prohibition come and fail and later blame it on evangelical Christians.
3. And later more or less corner the market on alcohol with state run liquor stores and higher sin taxes on alcohol.