Tax revolt


Tax revolt

A tax revolt is a political struggle to repeal, limit, or roll back a government-imposed tax.

1930s, The Great Depression

In the United States, it is often used to refer to a series of anti-tax state initiative campaigns. The first significant wave of these campaigns was during the 1930s. The Great Depression introduced unprecedented tax burdens to Americans. While real estate values plummeted and unemployment skyrocketed, the cost of government remained high. As a result, taxes as a percentage of the national income nearly doubled from 11.6 percent in 1921 to 21.1 in 1932. Most of the increase took place at the local level and especially squeezed the resources of real estate taxpayers. Local tax delinquency rose steadily to a still standing record of 26.3% in 1933.

Many Americans reacted to these conditions by forming taxpayers' leagues to call for lower taxes and cuts in government spending. By some estimates, there were three thousand of them by 1933. Taxpayers' leagues endorsed such measures as laws to limit and rollback taxes, lowered penalties on tax delinquents, and cuts in government spending. Partly as a result of their efforts, sixteen states and numerous localities adopted property tax limitations while three states instituted homestead exemptions.

While taxpayers' leagues usually favored traditional legal and political strategies, a few were more direct. Probably the best known of these was the Association of Real Estate Taxpayers in Chicago. From 1930 to 1933, it led one of the largest tax strikes in American history. At its height, it had 30,000 paid members, a budget of 600,000 dollars, and a weekly radio show.

By 1933, the taxpayers' leagues had entered a period of decline. Several factors undermined the conditions that had nurtured revolt. For example, economic conditions gradually improved, the federal government extended aid to homeowners, and local governments reduced reliance on real estate taxes. To some extent, the tax revolt also fell victim to an effective counterattack by municipal reformers, government officials, and the holders of municipal debt such as bondholders and bankers who formed so-called "Pay Your Taxes" campaigns throughout the country. These campaigns used a combination of door-to-door solicitation, threats of coercion, and inducements, such as installment payment plans, to collect back taxes. [David T. Beito, Taxpayers in Revolt: Tax Resistance during the Great Depression (Chapel Hill: University of North Carolina Press, 1989).]

An alternative theory describing the decline of the taxpayers' leagues is that laws limiting existing taxes and new tax revenues from the manufacture and sale of alcohol due to the repeal of prohibition eliminated the need for the taxpayers' leagues. [ [http://mises.org/journals/jls/15_3/15_3_4.pdf THE GREAT DEPRESSION TAX REVOLTS REVISITED Mark Thornton and Chetley Weise] ]

1970s and later

A second wave of tax revolts began in the late 1970s and were particularly popular in the West. In 1978, voters in California passed Proposition 13, sponsored by Howard Jarvis and passed overwhelmingly by voters in 1978, which drastically limited property tax levels in the state.

In subsequent years, the state initiative process, initially championed by Populists and progressives, has been increasingly used for such purposes by conservative and libertarian political forces. In the United States, notable examples include a series of initiatives in Oregon (see Oregon tax revolt) and Washington (see Tim Eyman), the Taxpayer Bill of Rights (TABOR) in Colorado, and Proposition 2½ in Massachusetts. The most recent British example is the poll tax riot of 1990.

Critics charge that these initiatives have wreaked havoc on state governments and have been partly responsible for recent fiscal crises in many states; some have argued those consequences were intended -- that the actual motivation behind slashing taxes is to "starve the beast".

Proponents point to the fact that these claims that "The Sky Is Falling", intended to scare the public away from supporting such measures, have failed to materialize.

References

ee also

* Starve-the-beast
* Tax resistance
* Tennessee Tax Revolt
* Tom Cryer
* Carla Howell, Person behind referendums to eliminate the Massachusetts personal income tax.

External links

* [http://www.cato.org/dailys/06-06-03.html The Tax Revolt Turns 25] , from the Cato Institute
* [http://www.tntaxrevolt.org/ Tennessee Tax Revolt]


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