Tuesday, March 26, 2013

Pruning the Economy

During the Second World War ballroom dancing became popular and sophisticated and, in parallel, the "Big Bands" developed. Dancing was a center of American entertainment in the 30's and 40's.

In 1944, the United States government levied a steep tax against any and all establishments which contained dance floors, served alcohol and other refreshments, and/or provided musical entertainment. This was the so-called "Cabaret Tax." It was 30% of the gross receipts. After the war it was continued in 1947. Two thirds of musicians in the industry left their work forever and the Big Bands broke up. After the war people went out less, stayed home.

The power to tax is the power to destroy. So said Daniel Webster, counsel for the Second Bank of the United States, repeated by Chief Justice Marshal in McCulloch vs Maryland in 1819. In McCulloch the debate was over the state's right to tax the national government. It is used in special arguments, taxation of religion especially. For some reason the wisdom of this statement is seen very parochially, very limited in its scope, when it is the essence of one of government's greatest powers and evils.

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