80 years ago today yesterday (hey, I’m busy here) the United States Federal Government decided that their experiment with Prohibition was a failure and it should end.
There’s been a lot of incredible work done over the years chronicling the affects of Prohibition on both the wine industry itself, but the country as a whole. For some wine regions like Livermore, Prohibition and their inability to get started quickly after its repeal was the end for their inclusion in great AVA’s of American wine. If you asked someone in the early 1900’s what the most important wine region in America happened to be, they might have said Napa Valley, or they might have said Livermore. It’s interesting to me that some regions were able to innovate and stay afloat during those trying times, while others struggled to come out the other side so to speak. It also makes me wonder, can Livermore come back to the forefront? Where are we seeing innovation take place currently in American wine?
More to the point of Prohibition and its repeal,Ken Burnsproduced an outstanding documentary on the history of the laws and their unintended consequences, which is worth a look if you ever have what amounts to a free weekend. The one thing that struck me then and continues to strike me now about the history of that time period is that the IRS and the income tax allowed Prohibition to happen in the first place.
It has been said and documented that before 1913, about a third of the entire revenue of the Federal Government came from taxes on alcohol sales. After 1920 though, politicians had quickly realized that income taxes were a more efficient way to raise revenue than were use fees, like what had been going on to that point. With almost two thirds of revenues now coming through income taxes, the government was able to start what we’d largely call a culture war on organized crime and the sale of alcohol.
It’s also been said that behind closed doors in the early 1930’s when declining tax revenues started to hit harder than normal (revenues were down 60% from their peak) politicians found an easy way to raise revenues once again, allow the sale and taxation of alcohol.
In any case, I think all of us can agree it’s an interesting time period of American history and as we continue to have debates about the relatively acceptable size of government today, hopefully we can look back at this time period and learn a little something about taxes, rights and government spending.