Tax revolt

From Ballotpedia
Jump to: navigation, search

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

In the United States, the term is often used to refer to a series of tax reduction or tax limitation ballot measure campaigns, put before voters through citizen initiatives.

Since 2000, the most notable examples of ballot measures seeking to limit taxes have been those supported by Bill Sizemore in Oregon, Tim Eyman in Washington and Americans for Limited Government, which unsuccessfully promoted Taxpayer Bill of Rights or TABOR measures in multiple states in 2006.

Tax revolts start during the Great Depression

The first significant wave of these campaigns was during the 1930s. The Great Depression introduced unprecedented tax burdens to Americans. Real estate values plummeted and unemployment skyrocketed, but 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 property 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 radical. 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.

California's Proposition 13 renews the revolt

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. The ballot measure was overwhelmingly approved by voters in 1978, and dramatically 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 tax relief purposes by conservatives, libertarians and limited government advocates. 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.

Diverse reactions

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.

External links