A Study of the Impact of Special Interest Groups on Major Tax Reform: Agriculture and the 1913 Income Tax Law

Abstract

Farmers have benefited from unique tax treatment since the beginning of the income tax law. This paper explores agricultural influences on the passage of the income tax in 1913, using both qualitative and quantitative analysis. The results show that agricultural interests were influential in the development and passage of tax/tariff laws. The percentage of congressmen with agricultural ties explains the strong affection for agriculture. Discussion in congressional debates and in agricultural journals was passionate and patriotic in support of equity for farmers. The quantitative analysis reveals that the percentage farm population was a significant predictor of passage of the 16th Amendment by the states and of adoption of state income taxes in the 20th century.

The rise of lobbying and interest groups in the states during the Progressive Era

“…Gray and Lowery (1996) examined client organization totals from 1975 and later years to understand how communities of organized interests grow over time. Studies of Gilded Age or Progressive Era lobbying do not examine lobby records at all and, in studies on other topics, the influence of organized interests during these periods is estimated using proxies (e.g., economic statistics or membership totals) (e.g., Thompson, 1984;Baack and Ray, 1985;Ainsworth, 1995;Clemens, 1997;Barney and Flesher, 2008). Carroll and Hannan (2000) make considerable progress in explaining the demographics of business firms and other organizations, they do not examine instances of Registration spread more slowly throughout the s and s, but after Congress enacted its first permanent registration statute in , six more states adopted registration within two years.…”

Indonesia's Agriculture Tax: An Approach to the GTAP Model

“…In addition, under the flat tax, larger farms and more profitable farms would be relatively better off. Barney & Flesher (2008) want to explore agricultural influences on the income tax passage in 1913, using qualitative and quantitative analysis in their paper. The results show that agricultural interests were influential in developing and passing tax/tariff laws.…”

“…Nowadays, it has become an agriculture importer country as its population was increasing from time to time and hit around 260 million or more (World Bank, 2018). Tax policy is one of the tools to control a nation's needs and the needs of its society (Barney & Flesher, 2008). For example, one of Indonesia's taxes introduced in early 2014 is an agriculture tax widely used in other countries since the early 1900s (Barney & Flesher, 2008;Doye & Boehlje, 1985;Hertel & Tsigas, 1988).…”

“…Tax policy is one of the tools to control a nation's needs and the needs of its society (Barney & Flesher, 2008). For example, one of Indonesia's taxes introduced in early 2014 is an agriculture tax widely used in other countries since the early 1900s (Barney & Flesher, 2008;Doye & Boehlje, 1985;Hertel & Tsigas, 1988). Such tax aims to control the volume of goods imported and improve the domestic farmer's production, but sometimes it can make the domestic farmers suffer (Milošević et al, 2020).…”