Sorry if I perceived incorrectly, but you are making it sound as if economic system before income tax was all hunky dory and people lived satisfying comfortable lives. From what it seems, system before income tax had much worse lives (on average) than the system after income tax.
So can you please clarify if you indeed claim that pre-income tax economic system was superior? If so, any citations?
How does it end? Probably with brittle systems that are unable to survive exogenous shocks.
The Cobra effect, by the way, is a great illustration of the problem with static thinking. Problem: too many cobras, Solution: pay a bounty for them, Unintended side-effect: people raise cobras for the bounty so now there are even more cobras.