Republicans Invented Progressive Income Taxes — Will They Turn Left Again?

President Trump’s sagging poll numbers have prompted some eager speculation about the future of the Republican Party.

If Trump loses, will the GOP rethink its political strategy? Recast its policy agenda? Or will it double down on both — on Trumpism, whatever that might mean?

Whether Trump wins or loses in November won’t settle these questions.

“The future of the Republican Party belongs to him,” Matthew Walther argued in a recent analysis for The Week. “His legacy — arguments about its true value and how it should be understood, its relationship with previous right-wing insurgent movements such as the Tea Party — will determine the course of the GOP’s fortunes for the next decade.”

Indeed, Trump’s legacy will almost certainly endure for over a decade because it’s about more than just him. Trumpism is part of the Republican Party’s broader historical evolution. It began to emerge long before Trump took his famous ride down the escalator in Trump Tower to announce his candidacy in 2015; it will persist long after he vacates the Oval Office, whether that’s in January 2021 or January 2025.

American presidents — even the transformational, disruptive ones — exist as part of a process. They don’t emerge from nowhere to upend and recast political institutions single-handedly. They channel and give expression to changes already underway in American society.

But that doesn’t mean individual presidents don’t matter. Who gets elected can make a world of difference, both to the nation as a whole and to the party that nominates a president. Elections and individuals can also make a difference to policy: Presidents have been known to radically transform the policy agenda of their party, at least on some issues.

Trump seems to have done that with trade, for instance, and possibly with immigration. In both cases, it’s not entirely clear whether he was driving the change or simply riding a wave. But Trump has clearly changed the Republican approach to both issues.

On taxes, Trump has been less of a disruptive or transformational force; for the most part, his tax agenda has been consistent with GOP tax preferences of the last several decades. But other presidents — and especially other Republican presidents — have played a transformational role in defining the party’s tax agenda.

Republican economic policy is surprisingly heterodox when we broaden our view from the last 40 years to include the party’s long history since its founding in 1854.

As Boston College historian Heather Cox Richardson explains in her 2014 book To Make Men Free: A History of the Republican Party, the GOP was once the party of high taxes, lavish spending, and rigorous regulation.

And you can thank Abraham Lincoln for that progressive agenda.

Republicans Who Matter

Richardson’s book focuses on three Republican presidents: Abraham Lincoln, Theodore Roosevelt, and Dwight D. Eisenhower. Each was pivotal to the development of the Grand Old Party, encouraging transformational change and provoking powerful backlash.

Perhaps most important, each tried to reconcile two powerful but often competing commitments that have been central to the party since its founding: the promotion of equal economic opportunity for all and the protection of individual and corporate property rights.

Richardson is no disinterested observer in the morality tale she sets out to tell: She is firmly on the side of economic opportunity. Her focus on Lincoln, Roosevelt, and Eisenhower reflects that commitment. Each of those presidents emphasized opportunity over property, she argues.

To her credit, Richardson wears her politics on her sleeve; that sort of transparency is good, preferable to any sort of false objectivity. I’m enough of a postmodernist to believe that objective history is a pipe dream.

But at the same time, you must be careful with your transparency: It’s not a license to play fast and loose with the history. And while Richardson is a fine historian, her admiration for the “opportunity” strain of Republican thinking has a tendency to lead her down some strange paths.

Richardson’s political inclinations lead her to discount the importance of some GOP figures who deserve more attention in any history with a claim to being comprehensive — like Ronald Reagan. Richardson talks plenty about Reagan, but she doesn’t accord him pride of place in her narrative. Like other presidents hailing from the party’s property rights wing, he is cast as a foil.

Richardson also tends to dismiss the substance of conservative thought emanating from the property rights side of the party — not to mention other strains of conservative thought that don’t fit neatly within the opportunity/property dichotomy she has constructed. She never takes seriously any of the myriad arguments against activist government, instead reducing them to cover stories or rationalizations for economic oligarchy.

In a review for The New York Times, Jonathan Rauch made this point rather compellingly. “The idea that an overweening federal government is a threat to both freedom and equality (not to mention prosperity) goes back to Jefferson, James Madison, Patrick Henry and some other fairly respectable personages,” he wrote. “You can disagree with them, or with Coolidge or Reagan or Friedrich Hayek or Milton Friedman or George Will, but to dismiss them as nothing more than mouthpieces of the wealthy and big business is to indulge in the sort of anti-intellectualism that Richardson accuses conservatives of harboring.”

Still, if reviewers have found much to criticize in Richardson’s book (especially its lack of subtlety), they have been quick to acknowledge that it makes for a good read. And a powerful argument can be its own reward, clarifying issues and sparking useful debate.

This concession is evident in various backhanded compliments offered up by academic reviewers. “Those who like their history in sharp black and white will find this a compelling book,” observed Donald Critchlow, one of the giants of academic policy history. Ouch.

I’m unashamed to admit that I like a good strong argument, even when it’s flawed. And there’s a lot to learn from Richardson’s book, especially regarding the early history of the Republican Party.

Richardson is determined to try to answer a particular question: How did the Republican Party, founded on the premise that all people deserve a shot at economic success, become a protector of entrenched economic privilege? You can object to the formulation of that question (and the second half of it in particular).

But its characterization of the GOP’s founding is provocative and insightful. The best thing about Richardson’s book is its chronicle of the early Republican Party. She charts its rise and fall as a force for economic progressivism — including its embrace and later rejection of progressive taxation.

Lincoln’s Vision

In telling the story of the Republican Party, Richardson gives pride of place to economic issues. She doesn’t ignore other elements of national governance, but ultimately almost everything comes back to economics — and to taxes in particular.

Indeed, she begins her book with a snippet from the 1862 debate over the Civil War income tax, which included a particularly choice observation from Rep. Justin Morrill. “The property of the people belongs to the government,” the Vermont Republican thundered to his colleagues.

That’s not a sentiment we typically associate with Republicans, and yet it wasn’t out of character for them in the 1860s. To be sure, there were extenuating circumstances in 1862, including the Confederacy’s continued military success on the battlefields of Virginia. But Morrill’s comment captured something important about the early Republican Party.

Republicans of the 1850s and 1860s believed in a powerful, activist government that would work assiduously to enhance the economic opportunities available to all Americans. Initially, the party defined Americans in racially restrictive terms, but as the Civil War continued, many Republicans extended their founding ethos to include freed slaves in the former Confederate states. 

Republicans believed that the party stood for the interests of average hardworking Americans against the entrenched economic elites of the Old South — indeed, that was the driving force behind the party’s creation in the 1850s.

Lincoln was a principal champion of this view. In making the case for it, he set about a fundamental refashioning of American memory.

“Lincoln asserted that the Declaration of Independence rather than the Constitution embodied America’s fundamental principle: equality,” Richardson writes.

The Constitution (in Richardson’s retelling of the Lincoln argument) was something of a betrayal — a capitulation to the champions of property.

That view of the American founding and its documents isn’t universally accepted by today’s historians. Neither do those same historians broadly agree that Lincoln saw the documents that way.

Still, it’s not an implausible reading of either the documents or Lincoln’s view of them. And it goes a long way toward explaining the Republican governing program of the Civil War.

The Republican Party of the Civil War was a party of activist government. That was driven by the exigencies of war, but its actions and agenda extended beyond simple war fighting.

The party introduced an ambitious homesteading program designed to encourage the development of small farms. It also established a system of land grant colleges, rooted in the belief that education would bolster economic opportunity for individuals and economic growth for the country at large.

Republicans believed in collective action and common purpose — in pursuing tasks jointly that were too large to tackle individually. They believed in government.

Republican Finance

Funding this sort of activist government, however, was no small task. Especially when that government was fighting an all-consuming and expensive war.

The Republican Party of Lincoln therefore set about refashioning American public finance from the ground up. In many respects, that translated into an effort to democratize public finance — by selling bonds not only to bankers, but to individuals, for instance. And by establishing, for the first time, a national currency.

To undergird that financial innovation, Republicans expanded the nation’s revenue system, which before the war had never reached much beyond tariff duties (except during previous wars, and even then just barely). Union lawmakers introduced a broad range of excise taxes, a new federal property tax, and the nation’s first federal income tax.

That last tax, in particular, was justified in distinctly progressive terms, with Republican champions insisting that rich Americans should be made to shoulder a reasonable share of the nation’s fiscal burden.

“The weight must be distributed equally, not upon each man an equal amount, but a tax proportionate to his ability to pay,” Morrill explained to the House.

Lawmakers insisted on creating a national tax collection agency rather than relying on state governments to administer the new levies. It was important to establish taxes as a link between the federal government and the people of the Union, they believed.

“If people were personally invested in the government, they would have a personal sense of responsibility for its survival and stability,” Richardson writes of lawmakers’ reasoning. “Unanimously, Republicans rejected an amendment that would give the states control of collecting the new taxes.”

Unwinding the State

The activist state of the Civil War was a success, at least as measured by military victory. But it provoked a backlash, even within the Republican Party.

The same party that had championed a federal income tax during the war was happy to let it expire in 1872 when the wartime emergency was past. And earnest talk about binding the state to its citizens through the machinery of tax collection was drowned out by incessant complaints about the “army of officials” necessary to collect federal taxes — and the income tax in particular.

Richardson explains in compelling detail how the Republican Party succumbed to its own internal dissidents. It was quick to recognize that for all its democratizing of public finance, it was still heavily dependent on Eastern financial interests — not just for continued national financial health, but for the party’s continued political viability against resurgent Democrats.

As Richardson tells the story, elements within the Republican establishment grew increasingly suspicious of the activist government they had once embraced.

“Almost as soon as the Civil War ended, the Republicans’ egalitarian vision came under attack,” she writes. “The war had required Americans to pay national taxes for the first time in history, and when government-funded programs helped ex-slaves and immigrant workers, opponents saw the very redistribution of wealth southern leaders had predicted.”

A party that once defended graduated rates in terms of ability to pay was, by the early 1870s, ready to throw those rates (and the income tax itself) to the curb, worried that they encouraged dangerous ideas about redistribution. Clearly, Republican ideology was on the move.

Gradually, the center of gravity within the party shifted away from Lincoln’s egalitarianism and toward a more corporatized version of Republicanism — one that emphasized high tariffs for protection but low taxes to allow for capital accumulation.

By the middle of the 1870s, the party had all but abandoned the working-class constituency it claimed to serve, Richardson contends. That was broadly true in spending, but especially true in taxation. Republicans had become the party of the rich.

Richardson does a fine job explaining this rapid transformation of the party, which seems undeniable. But I can’t help but wonder if the unwinding she describes is exaggerated by the circumstances of the war itself.

Yes, the Republicans of the 1860s embraced an activist form of government, including signature elements like the land grant colleges and the homesteading legislation.

But I suspect that she exaggerates the progressive impulse at work in the wartime Republican Party. That exaggeration seems most evident around taxation.

The rhetoric of wartime tax lawmaking was impressive. But much of its most progressive cast can probably be explained by the peculiar — and painful — circumstances of fighting a grueling Civil War.

It’s one thing to support progressive taxes when soldiers are dying on the battlefield; it’s another to support them in peacetime. I suspect that wartime support for the income tax may tell us more about the war than it does about the tax.

Postwar complaints about tax administration also raise some doubts about the statist inclinations of Civil War Republicans. For a party ostensibly devoted to activist government — and one that insisted on a large tax bureaucracy during the war — Republicans were quick to oppose activist tax collection once peace returned. It suggests to me that support for a rigorous tax bureaucracy may have been more instrumental than ideological.

Despite that observation, I think Richardson’s depiction of the Civil War Republicans is illuminating for the light it shines on the party’s postwar transformation. If the Republicans of the 1860s weren’t quite the redistributive, statist progressives that Richardson makes them out to be, the Republicans of the 1870s, 1880s, and 1890s were certainly much more conservative than their predecessors in the party of Lincoln.

Indeed, the working man’s party founded in 1854 — and celebrated so eloquently by Lincoln in the Gettysburg Address — is hard to discern in the Wall Street party that William McKinley led to victory in 1896.

Cyclic Change?

Richardson’s book tells a story about cycles. In her view, the Republicans have alternated between periods of progressive reform and oligarchic reaction.

Her heroes — Lincoln, Roosevelt, and Eisenhower — were champions of the working man, devoted to the idea that every hardworking American should have the opportunity to make good.

Each of these Opportunity Republicans (my phrase, not hers) provoked a reaction, Richardson contends. This reaction came principally from within the party, where the forces of oligarchy (or plutocracy, really) set out to quash the egalitarian impulse. Typically, the Property Republicans met with swift and enduring success.

Whether one is inclined to accept that cyclical view of the Republican Party’s history is one thing; for my money, it’s a bit overdrawn (like most cyclical theories of history).

But it’s still useful to appreciate the history of Republican ideology in America, which is far more variegated than we typically recall. In our myopic view of the political world, we tend to think of ourselves as admirably historical when we look back to the Nixon years, or maybe even to Eisenhower. And indeed, comparing today’s politics with the 1970s and 1950s can be useful.

But the distant past of the Civil War still has important lessons to teach us today. It’s worth revisiting those years — if only to appreciate just how quickly and thoroughly a party can change its governing philosophy when exigent circumstances change.