Question

The repeal of the Eighteenth Amendment, known as Prohibition, meant that alcohol could once again be legally bought and sold. What was the main economic reason the federal government favored its repeal? (A) so the members of the government could get drunk once in a while (B) so the government could stop spending money investigating alcohol smuggling (C) freedom of individual choice (D) so the government could gain revenue from the sales taxes on alcoholic beverages

Short answer

(D) so the government could gain revenue from the sales taxes on alcoholic beverages

Step-by-step solution

Analyze the options

The question asks for the main economic reason, so let's determine which options either don't represent economic reasons or are less significant in comparison to others: (A) This option is not an economic reason, so we can eliminate it. (B) This option is an economic reason but may not be the most important one. (C) This option is not an economic reason but a social one, so we can eliminate it too. (D) This option is an economic reason, and it could be significant.

Compare the remaining options

Now we need to compare the economic reasons given in options (B) and (D). Determine which one is the main reason for the repeal: (B) Stopping the spending of money on investigating alcohol smuggling is an economic reason, but it is focused on reducing the government's spending. (D) Gaining revenue from sales taxes on alcoholic beverages is an economic reason, which adds to the government's income.

Choose the main economic reason

Comparing (B) and (D), it is clear that gaining revenue is the main economic reason. The government would be more interested in increasing its income through tax revenue than reducing its spending on alcohol smuggling investigations. Therefore, the correct answer is (D).

Key concepts

Prohibition

Prohibition, widely known through the Eighteenth Amendment, was a significant period in United States history, enacted to curb alcohol consumption and its supposed societal ills.

Enforced from 1920 until its repeal in 1933, during Prohibition, the manufacture, sale, and transportation of alcoholic beverages were illegal. Although intended to improve public health and morality, Prohibition led to a surge in organized crime, unregulated bootlegging, and speakeasies, which were illicit establishments selling alcohol.

The societal landscape saw a dramatic change, as law-abiding citizens found themselves at odds with the law merely for wanting to drink alcohol. Moreover, the government faced enforcement challenges and a loss of tax revenue from the legal alcohol trade, which contributed to the eventual dissolution of Prohibition with the ratification of the Twenty-first Amendment.

Economic Reasons for Law Changes

Laws often change due to economic incentives or pressures. The repeal of Prohibition is a classic example of how economic factors can drive legislative transformation.

During Prohibition, the federal government and local authorities spent significant resources trying to enforce the ban on alcohol. This included costs related to policing, legal proceedings, and incarceration of lawbreakers. Concurrently, because the legal market for alcohol was stifled, the government was missing out on a substantial source of tax revenue.

The Great Depression, which began in 1929, further emphasized the need for economic recovery. The potential tax money from legalized alcohol presented a significant opportunity for the government to bolster its fiscal situation during these trying times. This economic reasoning laid the groundwork for changing the laws to reinstate the legal alcohol market.

Government Revenue from Taxes

Government revenue is crucial for funding public services, such as infrastructure, education, and defense. Taxes on goods and services are a primary means by which the government collects funds.

During Prohibition, one of the most pressing concerns was the government’s inability to collect taxes on the sale of alcoholic beverages. By lifting Prohibition with the Twenty-first Amendment, the government aimed to recapture this lost revenue.

Alcoholic beverages, once again legal, could be taxed, providing a source of income that had been missing for more than a decade. The sales taxes and excise taxes collected from the alcohol industry would go into federal and state coffers, thereby improving government budgets and funding essential services. As history shows, this economic benefit was a driving factor behind the repeal of Prohibition.