When you think of Prohibition and the ramifications it had on America, what is the first aspect that jumps to mind? I bet it has more to do with notorious gangsters or glamorous parties of the Roaring 20s, than lost tax revenue.
During Prohibition a single large speakeasy could take in $500,000 annually (equal to $9.4 million today). Mind you, not a single penny of this revenue could be taxed.
In fact, the United States’ national budget prior to Prohibition was so dependent on tax revenue from alcohol sales that in order to implement the Noble Experiment we also had to implement a national income tax. That’s right, prior to going dry nationally America did not have an income tax.