During his recent trip to Capitol Hill, former President Donald Trump floated a plan to finance the federal government in large part with revenue raised by import tariffs. The details are sketchy, but the proposal’s main idea is to rely much less on the complex U.S. income tax code, which penalizes work and imposes huge compliance costs on both individual and business taxpayers.
The former, and possibly future, president’s idea draws attention to eighteenth- and nineteenth-century U.S. public finance, when, in fact, tariffs ranked among America’s principal sources of government revenue, along with the proceeds from selling public lands and from imposing selective excise taxes on consumer goods—most notoriously Alexander Hamilton’s tax on alcohol, which triggered the 1794 Whiskey Rebellion. The national government was of course much smaller then.
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