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enter image description here (Source)

The above chart of US federal tax revenue as a share of GDP shows four distinct jumps:

  1. 1941-1945 (World War II)
  2. 1917-1920 (World War I)
  3. 1862-1865 (American Civil War)
  4. 1815 (the year after the Treaty of Ghent ended the War of 1812?)

Three of the four jumps clearly correlate to major wars, but based on the patterns for those three, a tax increase to fund the War of 1812 would be expected no later than 1814, and probably in 1813. What happened there?

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  • War of 1812 is a misnomer, as it ran through 1814 and (at least officially) into 1815.. Washington was burned in August 1814; and the Treaty of Ghent was signed in December, 1814, ending the war officially when Congress ratified it in February 1815. Jul 29, 2023 at 10:00
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    Not only did the War of 1812 finish removing the British naval blockade but also the end of the Napoleonic wars would have made the whole of Europe available as trading partners.
    – Steve Bird
    Jul 29, 2023 at 11:24
  • Increase in tariffs
    – justCal
    Jul 29, 2023 at 13:25
  • @PieterGeerkens, I'm aware that the name is a misnomer. Based on the patterns of the other three jumps, I'd expect a war-related increase in revenue to start no later than 1814, and probably in 1813. Having the jump in 1815, after the peace treaty was signed, suggests it's related to something other than the war, despite being suspiciously close.
    – Mark
    Jul 29, 2023 at 18:35
  • The question makes unsupported assumptions about the data and it's relationship to wars, but what's clear is that GDP fell in 1815.
    – Brian Z
    Jul 29, 2023 at 23:03

1 Answer 1

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Question: ? Why did US federal tax revenue jump in 1815? What happened here?

Short Answer:

War hurt trade, and trade was the largest revenue source for the US before 1812. War ends in early 1815. Trade returns, revenue returns.

Longer Answer:

In the early 1800's most federal revenue was based on trade(import and export taxes).

U.S. Federal Government Revenues: 1790 to the Present

Before the War of 1812, customs duties accounted for about 90% of federal government revenues.

During the War of 1812 the British imposed blockades on the eastern United States and thus cut off / reduced most of this revenue.

As you note the Treaty of Ghent ended the war of 1812 with the British signing it on December 24, 1814; It didn't official until signed by President Madison February 18, 1815. Marking the End of the War of 1812 and a boom on imports / exports and thus tax revenue.

The British Naval Blockade during the War of 1812

British Blockades began

  • February 6, 1813 – Chesapeake and Delaware Bays (“Mid-Atlantic”)
  • May 26, 1813 – New York harbor and Long Island Sound to New London
  • September 1, 1813 – North Carolina, South Carolina and Georgia (“Southern Coast”)
  • April 25, 1814 – Northern coastline from Rhode Island to Maine (“New England”)

According to the above source, these blockades remained in place until March of 1815, a few weeks after President Madison had signed the treaty of Ghent.

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