Oleo, Whiskey, and Cigars: How William Henry Osborn Implemented the 1913 Federal Income Tax

Abstract

Many scholars have chronicled the long political and legal battle that led to ratification of the 16th Amendment on February 25, 1913. However, none have described how the Bureau of Internal Revenue implemented the tax in only six months on a shoestring budget. William H. Osborn, the commissioner who oversaw the effort, left a diary of his experiences, which sheds light on the political, budgetary, and bureaucratic challenges he faced. While most internal revenue commissioners work in relative obscurity, Osborn won public acclaim by pursuing long-neglected evasions with headline grabbing criminal cases, pushing against patronage to hire qualified agents, and instituting cost-saving efficiencies. He melded political acumen, administrative genius, and a talent for inspiring his employees to build the basic framework for modern federal income tax collections. His experiences highlight the important, but often overlooked, role played by skilled bureaucrats.