This is from an article in the Baltimore Sun of December 15, 1933, by Dewey L. Fleming. It goes on: “he thought perhaps the product could stand a levy of 4 cents a gallon.” The idea of phasing in sin taxes is not new. Congress set the initial rate at 10 cents in early 1934, but, indeed, cut it back to 5 cents in 1936. The 1936 tax cut, though, supposedly responded to a cut in tariffs on French wines, involved in a trade for lower French taxes on American autos. But French wines would have borne the excise tax, too, in addition to the tariff, I think.
The material in the previous paragraph is about liquor taxes, which started out at $2 a gallon after a brief period extending the previous $1.10 rate. That tax rate was increased in 1938 and often thereafter. Import duties on liquor started increasing right away, in 1934. So maybe the wine rate started out too high, and the liquor rate didn’t. Hard to say.
The Center for New Revenue 