Summary: The United States Tax System

Protective Tariff- This basically protected all sorts of business and was created during the civil war.

Following its war with France, Britain decided that to generate income to pay off its war debt, it would levy taxes on the American Colonies. To raise revenue for the crown many taxes were imposed on the American colonies. The Sugar, Stamp, and the Townshend Acts, were imposed on the colonies in 1763. These taxes or Tariffs would contribute greatly to the American Revolution.

With the surrender of Cornwallis at Yorktown, the revolutionary war was over, and the United States began the arduous task of rebuilding an economy held back by colonialism and destroyed by war. From the 1780s up until the 1810s, the economy was slowly growing and diversifying, however, the War of 1812 halted many of those advanced. The war ruined the United States economy once again, but it allowed it to grow and develop to new heights and become more prosperous than before the war with development of capital stock, population growth, higher prices for export, and a nation expanding to the west. After the revolutionary war, the United States began building the new economy.

The Articles of Confederation did not allow the national government to collect taxes. After the Revolutionary war, America had many war debts. They also needed to be able to pay the soldiers who served in the army. However, because of their inability to tax, they were unable to get the money to pay off debts. In a letter to George Washington, James Madison once wrote that the government should have “the right of taxing both exports and imports”, and that they should have the regulation of trade. Also, there was no official currency while the Articles were taking effect. There

This plan, the American System, created a new banking system, better infrastructure, and a tariff that would protect American businesses. A congressional record from 1816 shows the support from New England and the Middle States for this protective tariff (Document 7). The tariff was supported by these states because it would protect the fragile American industry from Britain, who was shipping cheap goods to America in an attempt to stump their economic growth. The Tariff of 1816 charged a tax of around 20 percent on all imported goods. This, in turn, helped American businesses because it made American goods look less expensive than foreign goods. The adoption of the tariff increased nationalism because it gave people a sense that the American government supported the people's economic interests and it showed that America's economy could prosper on its own. In Document 7, New England and the Middle States supported the tariff because trade was their primary source of income. For example, in New England, the soil was rocky and was not suitable for agriculture. Therefore, the people turned to factories to produce manufactured goods. The Southern states, however, had fertile soil for agriculture, and thus opposed the Tariff of 1816. Since the south had a large agricultural economy, they relied on imports to obtain manufactured goods. When the tariff was passed, the South had to begin paying more for these

The Tariff of 1816 can be

Although the British government acquired raw materials from the thirteen American colonies, the proceeds that were earned did not benefit their states but rather it benefited the colonial powers. The mercantile system was among the many causes that pushed for revolution. Apart from that, the triangular trade system was prevalent in Northern America, whereby barter trade was conducted within other regions. The Americans traded for goods that they had in abundance and in exchange they were given those materials that they had in scarce amounts; that is, products such as gold and silver. However, these goods only benefited the British in England as the Americans were left to fend for themselves. Therefore, there was no balance of trade in the region. Besides trade, some policies were enacted by the British government that were not in favor of the American citizens. Gott further states that there was an act that was passed in 1699 known as the Wool Act, which prohibited the American people from exporting American-made cloth (30). Consequently, this led to the poor trade and poor conditions of living for most farmers who relied on cloth-making as they had cotton ginneries and cotton farms. In 1732, another policy known as the Debt Recovery Act was passed. It decreed that procession over any land and slaves within the American soil was a property of the colonial

The southern Congress imposed a minor tariff in 1861, but the contribution due to it was $3.5 million only and that too in four years. In 1861, a small direct tax of 0.5 percent was also imposed on personal and real property. But the most states not collected the tax. In 1863, due to inflation, the government decided to enact a progressive income tax. It was set as a levy of 8% on certain goods used for excise, sale and license duties. Additionally,

Largely, Henry Clay, and his “American System” promoted it. He had previously proposed an unsuccessful tariff of the likes in 1820 (Northrup. 362). The protective tariff arose out of a growing concern for the negative impacts of relying on foreign imports. The U.S wanted to sever their ties with Europe once and for all. When addressing The House of Representatives in March of 1824, Clay justified the bill stating that “The object of the bill under consideration is to create this home market, and to lay the foundations of a genuine American policy” (Clay).

A tariff is a tax on foreign goods. The price of foreign goods increases with the tax, and provides revenue for the government, which makes American products more appealing. This is because the foreign goods that were cheaper are now more expensive. However, why was there a need for tariffs in the early 19th century (1800)? The reason is because, American industries were young, Britain flooded the US market with cheap goods after the War of 1812, and foreign goods have been often cheaper. In order to make sure American businesses could prosper, there had to be tariffs on the foreign goods. The tariff of 1816 was the first substantial protective tariff of the American System; supported by Henry Clay, but opposed by John C. Calhoun and Southern cotton growers. The tariff of 1824 increased the rate of the protective tariff and opposition in the South grew. In the Tariff of 1828 (Tariff of Abominations), there were higher protective tariffs to New England Mills; and Southerners were outraged including Calhoun.

Tariffs in United States history have played important roles in trade policy, political debates and the nation's economic history. A tariff is a tax on an imported good. Each unit of a good that is imported into a country the tariff would increase. Tariffs had enormous affect on the Untied States, main function or purpose of the tariff was to pay the federal budget. At one time tariffs were main source of revenue until Federal income tax began in 1913. Originally this tariff was to help pay for improvements, such as roads, canals, and lighthouses. Tariffs affected southern states negatively; because the southern states weren’t as dependent on manufacturing as the northern states causing the south to not depend on tax from European imports.

Although tariffs usually cause domestic prices to increase they can have a positive effect on our economy and specifically our domestic producers of steel and their employees. The US trade policy has historically been protectionist in nature, and congress, the principle body of power for import policy, heavily favored domestic firms over their foreign competitors (Irwin 146). As a result, domestic steel producers have had tariffs and quotas in place for many years. An effective tariff raises revenue for our US government and can help to subsidize domestic production at the expense of foreign producers. This is good because the American government receives money from foreign exporters that it would not have otherwise had access to. This money can then be used in domestic government policies and could

In the article, “The US Tax System: Who Really Pays” by Stephen Moore, he justifies his belief that there is little to no correlation between economic mobility and equality. Moore delivers his reasoning by contradicting relatively popular statements where some are virtually untrue and others are merely common opposing viewpoints. However, in the end Moore concludes his argument with the belief that raising the taxes on the wealthy would not help the poor’s income mobility, which I support one hundred percent.

In modern economic policy of nations and states, the tariffs a tool to tax goods and services being imported. The principal desired outcome for this tool is to create security for the domestic industry from the imported product, which may be cheaper for consumers to purchase. (McEachern, 2015)

Economic policy of nations and states, tariffs are tools used to control the flow of goods, services and resources being brought into the country. The overall purpose is to create security for the domestic industry from the imported product. These products can sometimes be less expensive to purchase than the goods being manufactured in the local economy. (McEachern, 2015) The government does this either stimulate or deflate trade with other countries. (Fontinelle, 2012)