1817 James Monroe - Repealing Internal Taxes

In 1817, William H. Crawford, Secretary of the Treasury worked closely with President James Monroe to review the favorable condition of the revenue and the treasury.  Crawford estimated that the receipts for 1817 would be $24.5 million, and expenses would be $21.8 million leaving a budget surplus of $2.7 million.   $20 million of the revenue was to come from duties or tariffs, while just $2.5 million came from internal taxes.  Crawford noted that unless new demands came from the War and Navy Departments or for increased spending on a system of internal improvements, revenue would exceed the demands of the government.  But which of the taxes should be cut?  Tariffs or internal taxes.   Crawford believed that internal taxes had to be either completely abolished or fully kept intact.  Internal revenue taxes were imposed in 1813 to help fund the War of 1812.   Sugar, carriages, liquor and auctions were taxed, and  commissioners, district collectors and assessors were employed int the collection of these taxes.  Revenue from internal taxes was already very low, and if not completely abolished, the Secretary of the Treasury feared that it might leave the impression that they were retained for patronage reasons (jobs and favors) rather than revenue purposes.  Thus, Crawford proposed to Monroe that the internal taxes be abolished.  On December 2nd, in his first state of the Union address, President Monroe endorsed Crawford's plan to abolish internal taxes.

"It appearing in a satisfactory manner that the revenue arising from imposts and tonnage and from the sale of the public lands will be fully adequate to the support of the civil Government, of the present military and naval establishments, including the annual augmentation of the latter to the extent provided for, to the payment of the interest of the public debt, and to the extinguishment of it at the times authorized, without the aid of the internal taxes, I consider it my duty to recommend to Congress their repeal."

The president continued, by sharing some words of wisdom, that our government needs to hear today more than ever. There is absolutely nothing wrong with imposing taxes to raise revenue for sudden and unforeseen events. Monroe, called this an "obligation of the most sacred character", but so is the repeal of such taxes when it is safe to do so.   Today, the mantra seems to be "Don't ever let a crisis go to waste", and with each passing crisis taxes are increased, but never repealed. 

"To impose taxes when the public exigencies require them is an obligation of the most sacred character, especially with a free people. The faithful fulfillment of it is among the highest proofs of their value and capacity for self-government. To dispense with taxes when it may be done with perfect safety is equally the duty of their representatives."

Three days later on December 5, 1817, Crawford delivered his treasury report to the House Committee on Ways and Means where the reaction was favorable.  The repeal became law on December 23, 1817.  Americans were free from internal revenue taxes for almost 50 years from 1817 until 1861.

But just in case, President Monroe left the door open, in case the internal taxes were needed again.  He closed out his address with open eyes,  " I shall nevertheless be attentive to events, and, should any future emergency occur".  Of course, this time, he would be more cautious, and "less prompt to suggest such measures and burdens".

"In this instance we have the satisfaction to know that they were imposed when the demand was imperious, and have been sustained with exemplary fidelity. I have to add that however gratifying it may be to me regarding the prosperous and happy condition of our country to recommend the repeal of these taxes at this time, I shall nevertheless be attentive to events, and, should any future emergency occur, be not less prompt to suggest such measures and burdens as may then be requisite and proper."

In his second State of the Union, President Monroe, was happy to announce these "salutary" that is beneficial provisions had, "it is presumed" secured relief for manufacturers by offsetting the increased cost foreign goods due to tariffs.   The country was seeing greater activity in several industries and Monroe expected that this would gradually help others industries "gradually revive and triumph".  Repealing internal taxes seemed to be a good start on helping manufacturer's recover,  so Monroe suggested hat perhaps Congress could consider "granting further protection".

"The strict execution of the revenue laws, resulting principally from the salutary provisions of the act of the 20th of April last amending the several collection laws, has, it is presumed, secured to domestic manufactures all the relief that can be derived from the duties which have been imposed upon foreign merchandise for their protection. Under the influence of this relief several branches of this important national interest have assumed greater activity, and although it is hoped that others will gradually revive and ultimately triumph over every obstacle, yet the expediency of granting further protection is submitted to your consideration.

http://www.presidency.ucsb.edu/ws/index.php?pid=29459 
http://www.presidency.ucsb.edu/ws/index.php?pid=29460
https://www.archives.gov/research/guide-fed-records/groups/058.html
William H. Crawford: 1772-1834 by  Chase C. Mooney, pgs 147-150