Wisconsin magazine of history: Volume 71, number 1, autumn, 1987

              The Establishment of Wisconsin's Income Tax
By John O. Stark
T
'HREF-QUARTERS of a cen¬ tury ago, in 1911, Wisconsin enacted the nation's first wcjrkable income tax law-. This achievement is not a Wisconsin "first" that politicians are given to boasting about, nor is the genesis of that law a popular topic among the state's historians. Yet, as a piece of legislation that permanently affected life in Wisconsin, and helped uj establish im¬ portant standards and precedents for the rest of the nation, it merits a closer and perhaps more critical examination than it has hereto¬ fore received.
The prevailing interpretation of Wiscon¬ sin's income tax law is that it w-as pro-farmer and anti-manufacturer, the work of a progres¬ sive Republican legislature dominated by farmers and determined to realize Rcjbert M. La Follette's dreams about redistributing wealth and power. Supposedly, the income tax also would serve the secondary purpose of tax¬ ing those persons w-ho had escaped personal property taxes and real estate taxes because they owned intangible property: bank ac¬ counts, claims to debt, securities, ancl other property the value of which is not in their tan¬ gible attributes but in the rights, usually to money, that they represent. Therefore it was designed, according to that interpretation, to benefit one class of citizens at the expense of others.
But in fact—as is so often the case in legisla¬ tive ancl political affairs—the matter is a good
Copyright ©1987 Py 'l~he Stale Historical Sonets of Wiscomin AU rights of reproduf It'll! in any form reserved
deal more complicated, and the issues are somewhat less sharply drawn, than has often been assumed. A careful review ofthe concep¬ tion and drafting of the bill, of the persons who conceived and drafted it, and of the cir¬ cumstances surrounding its amendment and passage indicates that it w-as designed to, and in fact did, foster equity more than to further the interests of any single group. Indeed, mea¬ sured by its fairness and by the technical skill that went into it, the Wisconsin income tax leg¬ islation of 1911 w-as a landmark and a beacon to the federal government and the forty-five other states w-hich since have passed income tax law-s and depend on them for a substantial share of their revenue.
Historians have argued that the bill w-hich became Wisconsin's income tax law can best be understood as part of a historical process that lasted for decades. They describe this bill's significance so that it accords with general the¬ ories which they believe are valid throughout that long span of time. For example, David P. Thelen traces a sequence of events which in¬ cludes the economic shock of the depression c:>f 1893 to 1897; resulting anger about eco¬ nomic disadvantages, which was focused on local issues; the polarization of "the people" versus "the interests"; and Bob La Follette's skillful manipulation of some of these concerns—in part sincerely, in part to en¬ hance his pow-er and his progressive wing of the Republican party. Fhe result was a spate of
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