The Citizen-Consumer and the Origins of Progressive Income Taxation

    By way of underscoring Ajay’s emphasis on the importance of the pre-crisis conceptual transformation (and adding, perhaps unnecessarily, to the already-complex question of historical causation) I wanted to build on Ajay’s notion of fiscal citizenship to propose a further way of thinking about the relationship between the evolving political economy of citizenship and the rise of progressive income taxation.  There is now a sizeable literature analyzing the shift in civic identity in the late-19th and early 20th century, from production to consumption—more specifically, from understanding work itself as a source of independence, dignity and virtue; to understanding a worker’s ability to maintain a respectable standard of living as a measure those citizenly qualities.  This capacity to consume was at the center of union movements for a living wage, and for harnessing purchasing power (though boycotts and union label campaigns) to create a more just labor system.  (I’ve argued in my own work that the standard of consumption likewise became an important measure of fitness for citizenship in debates over federal immigration policy.) 

     This left me wondering whether this shift in the political economy of civic identity helped to shape the transformation of the fiscal state by giving new resonance to the long-standing critique of the tariff and fueling support for a non-consumption-based revenue system.  Ajay demonstrates that the tariff was widely viewed as inherently regressive, extracting more from those with less by surreptitiously folding the tax into the price of consumer goods.  And even if it had, at an earlier time, plausibly served to protect infant industries, with the maturation of American capitalism in the final decades of the 19th century it was increasingly viewed as an illegitimate special privilege bestowed on political favorites.  That’s basically a neo-Jacksonian critique of class legislation that, by the 1890s, had been around for decades.  (And as Ajay notes, it had been forcefully advanced against the tariff by figures like Thomas Cooley and David Wells.) 

     I wonder, though, whether that critique gained such traction when it did because it stressed the impact of the tariff on the cost of life’s necessities at precisely the moment when a worker’s capacity to consume—to maintain a respectable standard of living—was becoming a measure of not only personal independence but also, and more broadly, of the basic compatibility between the industrial labor system and equal citizenship.  This isn’t to doubt the vitality of neo-Jacksonian critique or the important role of the progressive economists in popularizing it; but rather to propose a further, perhaps complementary, way of understanding why political receptivity to a non-consumption-based alternative to the tariff system (i.e. the income tax) gained traction after the turn of the century.  In short, was painting the tariff as a regressive consumption tax more salient at the turn of the century than it had been just a couple decades earlier, precisely because one’s capacity to consume had become so much more central to American civic identity?  And while I’m at it, does the relative prominence of “consumer citizenship” in modern American political culture continue to serve as an impediment to serious consideration of broad-based consumption taxes?