A History of Taxpayer Revolts

"Mr. Taxpayer versus Mr. Tax Spender": Taxpayers' Associations, Pocketbook Politics, and the Law During the Great Depression, by Linda Upham-Bornstein, Temple University Press, 220 pages, $32.95

Though animus toward tax increases was a key reason for the American Revolution, historians have not shown much interest in the topic in other contexts. One reason may be that the history of tax revolts, much like the history of mutual aid or of nonunion workers during strikes, cannot easily be subsumed under the most popular analytical categories, such as economic class. So Linda Upham-Bornstein's "Mr. Taxpayer versus Mr. Tax Spender": Taxpayers' Associations, Pocketbook Politics, and the Law During the Great Depression is a welcome sign.

Upham-Bornstein, a historian at Plymouth State University, begins in the 19th century. The taxpayer leagues of the Gilded Age charged that political corruption had produced (as one group put it) "the reckless expenditure of the people's money." These organizations divided sharply along regional lines. In the Northeast, Gilded Age tax resistance groups were generally nonpartisan and had few apparent ideological axes to grind; in the South, they were vehicles for Democrats who sought to undermine Reconstruction governments that had raised taxes to fund new programs.

Southern taxpayers' organizations gained support from small white landowners who felt burdened by these levies. More than a few of these came from the so-called Scalawag group and might otherwise have voted Republican. These groups' leaders denied that race played a role in their efforts, but Upham-Bornstein does not find this convincing. While this skepticism is more than warranted, it is also true that tax increases on financially struggling white yeoman farmers greatly weakened the potential viability of the GOP as a multiracial coalition.

By the 1890s, the Gilded Age wave of taxpayer revolt had largely subsided in both the North and the South. But the Great Depression brought a rapid revival of resistance, with several thousand organizations springing up almost overnight. Massachusetts alone had more than 150 of them. A key reason was that taxes were now harder for many Americans to pay, thanks to slumping incomes, rising unemployment, and the laggardness of real estate tax assessments to fall as fast as property values. As Upham-Bornstein observes, "The American economy, the incomes of most Americans and the revenues of many American businesses shrank far more precipitously than did local and state government expenditures in the early 1930s, producing crippling taxes for many."

The agenda of these Depression-era organizations had some close parallels with those of the anti-tax groups of the 1970s and later. They demanded budget slashes and called for statutory limits on property taxes and governmental debt. Though most of the leaders favored conventional political methods, some called for tax strikes. These tended to be more spontaneous than labor strikes, which usually took place after careful planning and coordination. Politicians had a hard time quashing them, because the enforcement system had largely broken down in many communities.

Chicago's tax strike was particularly impressive. From 1930 to 1933, the Association of Real Estate Taxpayers, which represented some 30,000 members (mostly skilled workers and owners of small businesses) gradually escalated its tactics. Finally, it called for withholding property tax payments. Chicago became the center of one of the largest tax strikes since the 18th century, if not the largest. Tax collections plummeted, and the city government had to pare its budget by more than a third.

Upham-Bornstein concludes that tax resistance during the Great Depression had some success in limiting local and state taxes and spending. Despite, or perhaps partly because of, this success, these groups were in decline by the late 1930s. The author attributes much of this to stepped up federal subsidies to states and localities, which reduced upward pressure on state and local taxes. These included direct loans through the new federal Home Owners' Loan Corporation, which required that individual borrowers prioritize paying off their tax-delinquent obligations. In addition, the Public Works Administration told local and state governments that if they wanted subsidies from the agency, they should repeal (or creatively skirt) statutes limiting taxes. Although many participants in the 1930s tax revolt had anti-statist views, others were more receptive to the New Deal, even while calling for cutbacks on the state and local levels.

Upham-Bornstein briefly discusses the tax revolts of the 1970s and later, including the Tea Party movement that emerged during President Barack Obama's first term. While that movement had many similarities to the taxpayer activism of the Depression era, it put much greater emphasis on federal rather than local and state levies.

Upham-Bornstein is refreshingly evenhanded, and she avoids taking cheap shots or making simplistic generalizations. Her fair-mindedness deserves acknowledgement in a field where the spotlight often shines on those, such as Nancy MacLean, who are ideologically fixated on discrediting the intentions of every species of anti-statism. Most of Upham-Bornstein's analytical points are sensible. She makes a convincing case that New Deal subsidies dampened the motivation for tax resistance, either legal or illegal, and she poses intriguing questions about the extent to which African-American poll tax resistance counts as a form of tax revolt.

Nevertheless, there are places where the book disappoints. Upham-Bornstein characterizes President Herbert Hoover as an "antistatist" who "opposed federal spending for unemployment relief or to control agricultural output and support crop prices." Extensive evidence exists to the contrary. Hoover pushed for more government intervention through such programs as the Federal Farm Board, which was intended to control farm output; the Federal Home Loan Bank Board; and the Reconstruction Finance Corporation, which extended the first direct federal relief in American history.

While she underlines the fact that many resisters argued that underconsumption had led to the downturn, Upham-Bornstein generally neglects Hoover's similar views. He vigorously pressed "high wage" policies in an ultimately failed strategy to secure recovery. Hoover's underconsumptionist efforts to prop up wages found expression in such measures as the Smoot-Hawley tariff and the Davis-Bacon Act, which required contractors for federal projects to pay prevailing (union) wages.

Also largely absent in this book is a meaningful assessment of the contradictions in President Franklin Roosevelt's rhetoric and policies. Even while calling for more federal relief during the 1932 campaign, for example, he repeatedly attacked Hoover as a spendthrift. In one speech, for example, he called the president's tenure "the most reckless and extravagant past that I have been able to discover in the statistical record of any peacetime government anywhere, anytime." In words that might have appeared in any taxpayers' league broadside, he charged that Hoover "has piled bureau on bureau, commission on commission, and has failed to anticipate the dire needs and reduced earning power of the people." Roosevelt even promised to reduce the cost of current federal government operations by 25 percent.

Several of the author's statements about federal tax policy under Roosevelt cry out for elaboration. Here is an example: "The New Deal regime also helps to explain why tax resisters campaigned for economy and efficiency in local and state government while simultaneously supporting, or being agnostic about, New Deal spending. The Roosevelt administration refused to consider taxing the income of the middle classes and instead relied mainly on taxes on the wealthy and corporations, on indirect or hidden consumer taxes." That's true as far as it goes, but she could have explored the unflattering implications for New Deal tax policy. The ironic effect of high marginal rates was to shift the burden from the wealthy, who successfully scrambled to find shelters, and onto lower-income Americans who paid higher excise taxes.

These excise taxes, imposed on products ranging from cosmetics to radios to movie tickets, were paid primarily by the poor and middle class. In 1929, excise taxes constituted 19 percent of federal tax revenue, while personal income and corporate income taxes were 81 percent. By 1934, the latter had plummeted to 39 percent while the share held by excise taxes had risen to 61 percent. This starkly disparate tax impact undermines the New Dealers' claims of fostering tax equity.

The book also underplays the populist nature of the Tea Party revolt. While wealthy funders certainly played an important part in that movement, there is no denying the spontaneous energy of the protesters who marched in the streets and descended on "town hall" meetings.

But this book's valuable contributions outweigh these issues. Backed by meticulous research and thoughtful analysis, "Mr. Taxpayer versus Mr. Tax Spender" should be a model for future studies of the oft-neglected story of American tax revolts.

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