In celebration of tax season: How alcohol and women’s rights helped create the IRS

Toasting the IRSRevised March 29, 2018

I’m going to go out on a limb here and suggest that one of government’s brand values is not “up-to-date office equip­ment.” If you don’t believe me, ask if a PDF will do the next time your local government requests a fax. There’s a good chance the answer will be, “What’s a PDF?”

But when it comes to collecting money, the United States government keeps fairly well up with the times. In an age where our best prospects for digital payment adoptions are Millennials and younger, the folks in charge of the Internal Revenue Service introduced electronic filing way back in 1986. (Little known fact: Many working at IRS headquarters back then were not spring chickens.) Though taxpayer convenience may have been a motivator, I would suggest, at the risk of cynicism, that speeding collections and lowering costs may also have played a part.

Of course, you knew the IRS uses direct deposit. Here’s what you may not know:

The curious tale of how alcohol and the women’s movement led to the IRS

In 1913, a scant 73 years before the IRS began accepting direct deposit, the United States ratified the 16th Amendment, permitting Congress to impose an income tax.[i] Congress had already taxed incomes from time to time, but the 16 Amendment made its authority to do so official.

Ratification, however, had taken four years. During that time, the “income tax amendment” found a pair of allies who might, at first glance, seem unlikely: the Prohibition Movement and the Woman Suffrage Movement. Indeed, passage of the “income tax amendment” laid the groundwork for Amendments 18 and 19, which, respectively, banned the manufacture, sale, import, and export of alcohol and gave women the right to vote.

It was largely women, with the support of sundry male Protestant ministers, who championed Prohibition. But before they could persuade the then all-male Congress to ban alcohol, a practical problem would have to be solved: Alcohol taxation, permitted under the Constitution as an indirect tax, accounted to a good 30 to 40 percent of the nation’s revenues. Before it could pass Prohibition, the government would need a new revenue source. Decades earlier, the Women’s Christian Temperance Union (WCTU) had already championed an income tax as the answer. Author Daniel Okrent cites it in his book Last Call: The Rise and Fall of Prohibition:[ii]

 … to those in the dry movement who understood political and governmental reality, imposition of an income tax was also an absolutely necessary step if they were going to break the federal addiction to the alcohol excise tax. This had been obvious to the leadership of the WCTU as early as 1883, when the editors of the organization’s official organ, The Union Signal, coyly asked their readers, “How, then, will [we] support the government” if the sale of liquor is prohibited? The editorials had a ready answer for their own question: an income tax, they wrote, was “the most just and equitable arrangement ever made for the equalization of governmental burdens.”

The 18th Amendment, ratified in 1919, took effect in 1920. Chances are it was not lost on members of the U.S. Congress that Prohibition might displease a good deal of men, who now had the power to vote them out of office in retaliation. This was thanks to the 17th Amendment, passed two months after the “income tax amendment,” which took the election of the U.S. Senate and House out of the hands of state legislatures and placed it in the hands of voters. So perhaps giving women the vote with the ratification of the 19th Amendment in 1920, which just happened to be the same year Prohibition went into effect, was for Congress an act of job retention as much as or more than of fairness.

Prohibition, as you surely know, was an abject failure. About 11 months after the 19th Amendment accorded voting rights to women, the newly ratified 21st Amendment repealed the 18th Amendment. Once more, alcohol flowed freely through the land. The repeal, however, wasn’t a complete reversal. Congress left the federal income tax in place. So it is that the United States Treasury is able to have its tax and drink it, too.

I for one am grateful for the 21st Amendment. The Super Bowl just wouldn’t be the same without the Clydesdales. 


[i] Utah, where I live, is one of six states never to have ratified the 16h Amendment. The other holdouts are Connecticut, Rhode Island, Virginia, Florida, and Pennsylvania. If you happen to live in one of them, I recommend against letting that stop you from paying.

[ii] Okrent, Daniel. Last Call: The Rise and Fall of Prohibition. Scribner, 2011.

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