Prior to 1916, there was no income tax. Tariffs paid the bulk of the bills. Once the one-half of 1% income tax took over, however, tariffs came to be viewed with suspicion.The reason for that can be traced to the Smoot-Hawley Tariff Act passed in June 1930. Farmers were experiencing difficulty selling their products abroad due to protective tariffs, so Congress passed the act which raised U.S. rates — not only on farm products but also on industrial output. As a result, many nations raised their own protective tariffs, and international trade grounded to a standstill. American farm products rotted ...