A deep dive into organized taxpayer activity in the 1930s

This week in North Philly Notes, Linda Upham-Bornstein, author of “Mr. Taxpayer versus Mr. Tax Spender”, writes about what she unexpectedly discovered about the taxpayers’ associations during the Great Depression.

“Mr. Taxpayer versus Mr. Tax Spender” is, at least in part, the product of serendipity. About 25 years ago, my husband and I were reorganizing the basement of his law office in New Hampshire when I happened upon a box containing bound copies of the Coos Guardian from 1934, of which Arthur J. Bergeron, the firm’s retired senior partner, was the editor. This weekly newspaper provided contemporaneous accounts of the efforts of Arthur and the newly formed local taxpayers’ association to effectuate economic and political change in the community, region, and state. This story spurred me to investigate whether this manifestation of organized taxpayer activity was unique to northern New Hampshire or part of a broader movement during the Great Depression. In the ensuing years I identified a plethora of rich, untapped primary sources that documented the emergence of a nationwide taxpayers’ association movement in the 1930s.

A number of my findings surprised me. Among the most prominent are the magnitude of the tax revolt and the speed with which taxpayers’ groups multiplied; the attitudes of organized taxpayers toward the size and reach of government; and the distinctive form of collective tax resistance that emerged in the Reconstruction South.

The proliferation of taxpayers’ leagues in the early 1930s was remarkable. In 1928, they probably numbered fifty or so. As the domestic economy contracted, a good government professional observed in 1932, “an irresistible demand that the cost of local government be reduced” swept “across the country like a prairie fire.” By 1933 there were over four thousand taxpayers’ organizations nationwide.

The attitudes of tax resisters toward the role and reach of government in general, and toward the New Deal in particular, were also unexpected. Because much of modern tax resistance is grounded in the world view, articulated by Ronald Reagan in his first inaugural address, that “government is not the solution to our problems; government is the problem,” I anticipated that Depression-era tax revolters would exhibit intense antistatism. Although some organized taxpayers sought to shrink and shackle government, most did not want smaller, more limited government but rather government that was more efficient, more effective, more progressive, and able to provide necessary services in a cost-effective manner. Nearly all taxpayers wanted the price of government to undergo the same measure of deflation as the economy, but they also wanted to maintain the government services they needed and used. What most organized taxpayers desired was less expensive state and local government so as to reduce their state and local tax burdens.

The views of organized taxpayers toward the New Deal were a complicated and sometimes incongruous mix. The feelings of most members of taxpayers’ associations about the New Deal ranged from outright support to ambivalence. Two factors account for the overall lack of opposition to the New Deal from citizens who were protesting vigorously their state and local taxes.

First and foremost, New Deal programs were conferring direct, concrete benefits on many of these taxpayers, especially the housing, agricultural, and relief initiatives. Consequently, many members of taxpayers’ groups understandably welcomed—and some expected—the federal government’s intervention in the domestic economy. Even taxpayers with an individualistic, antistatist mindset tended to have mixed feelings about the New Deal, harboring suspicions of big government but recognizing their need for assistance from the Roosevelt administration and grudgingly accepting it.

Second, the New Deal tax regime did not produce significant tax awareness among or tax resistance from the middle classes because it eschewed taxing the income of the middle classes and instead relied mainly on taxes on the wealthy and corporations, on indirect or hidden consumer taxes, and on taxes (like social security payroll taxes) that taxpayers did not think of as taxes. By and large, taxpayers who participated in collective tax resistance at the local and state levels did not perceive New Deal spending to be adding to their tax burdens.

In my investigation of the 19^th-century origins and antecedents of Depression-era taxpayers’ associations, I was struck by how different collective tax resistance in the Reconstruction South was from organized taxpayer activity elsewhere. Outside the former confederate states, the overarching goal of nearly all taxpayers’ associations in this era was to reduce taxes, though in many cases taxpayers also had a genuine interest in promoting the public’s interest in good and efficient government. In the Reconstruction South, however, tax resistance under the guise of good citizenship was merely the means to other, ulterior ends. Taxpayers in the South used collective tax resistance in an effort to weaken government authority, “redeem” state governments from Republican control, reestablish the institutions of white supremacy, and nullify in practice (if not as a matter of law) the post-Civil War amendments to the United States Constitution. Taxpayers’ groups in the South also diverged from those in the North in their methods, including extrajudicial violence, which was absent from tax protests outside the former Confederacy.

Finally, tax resistance in the South was untethered to the evolving notions of civic responsibility and good citizenship that broadly animated Northern tax resistance. Most taxpayers’ groups outside the South were interested in, and worked for, better and more efficient government. Southern taxpayers’ leagues wanted the opposite: government that was worse, small, and ineffectual. The Redeemers were highly successful in their quest for low taxes, low spending, and weak state governments after 1877. In Mississippi, for example, between 1875 and 1885, Democrats cut the state budget by more than half and slashed taxes. The connections between organized tax resistance in the South and the commitment to good citizenship, better government, and the rule of law that most Northern taxpayers’ organizations evidenced was attenuated at best and often absent altogether.

Historians strive to be objective, but they often approach the subjects of their research with certain preconceptions. My investigation of organized taxpayer activity in the 1930s reminded me of the importance of keeping an open mind, expecting to find the unexpected, and adapting one’s historical analysis accordingly.

How state governments touch on nearly every aspect of public policy

This week in North Philly Notes, Michelle Atherton, co-editor of Pennsylvania Politics and Policy, writes about what states do and how much power they have within modern politics and policy.

In the midst of the modern 24/7 news cycle, and the focus on the tweet of the moment from our president, it’s easy to forget that politics in our federal system runs much deeper than the national level. Americans in general are woefully unaware of what states do and how much power they have within modern politics and policy. Statewide and local elections have much lower voter turnout than presidential years, as if the composition of state legislatures and governors’ offices barely matters compared to who occupies the White House. Many would argue these governing bodies matter even more to the lives of the average citizen, as state governments touch nearly every aspect of public policy.

Republicans in control in Washington, DC did not manage to repeal the Affordable Care Act (Obamacare), but it was originally up to the states to create their own healthcare exchanges, and whether to expand Medicaid. The Tax Cuts and Jobs Act passed in 2017 lowered federal taxes for most individuals—and especially corporations—but it also capped the state and local tax (SALT) deduction at $10,000, greatly effecting the calculus of state and local governments’ approaches to maintaining revenues.

Pennsylvania, for example, is one of the states most highly dependent upon property taxes for the support of public schools, collected locally, as opposed to relying on state taxes. Will the wealthy Philadelphia suburbs revolt come November’s general election as higher income households lose thousands of dollars in tax deductions? Perhaps the results will strengthen the case among many voters for doing away with the property tax altogether as a source of funding for public schools in the Commonwealth.

This issue and many others are explored in the first publication of Pennsylvania Politics and Policy: A Commonwealth Reader. Further topics include:

• What would it mean for Pennsylvania to adopt direct democracy such as the citizen-initiated referendum and recall like other states? Would politicians be more responsive and less prone to corruption?
• Why doesn’t the state of Pennsylvania place a severance tax on natural gas production? Every other state does. Alaskans each receive a dividend from fossil fuel extraction, yet Pennsylvania’s legislature refuses to move the issue forward even in the face of severe budget woes.
• Why doesn’t the state fund education based on the number of students in schools? Every other state in the nation bases funding on real student counts. In Pennsylvania, the politics of party and leadership control in the legislature dictates funding.
• Why does Pennsylvania not tax any form of retirement income, one of just a handful of states to do so? And, what does the rapid aging of the state mean for the bottom line of funding services both for the elderly and younger individuals and families?
• Why did it take so long to be able to buy wine and beer at the local supermarket? Pennsylvania took a unique approach to policing vice.

Another election for the governor, the entire House, and half the Senate of Pennsylvania is just around the corner. Here’s hoping Pennsylvanians find their way to the polling place to vote in proportion to the gravity of the election’s policy implications.

 

Commonwealth: A Journal of Pennsylvania Politics and Policy

This week in North Philly Notes, we promote our new online-only journal, Commonwealth.

A peer-reviewed, online-only journal that publishes original research across a broad range of topics related to the politics, policy, and political history of Pennsylvania, Commonwealth is interdisciplinary in nature and appeals to scholars and practitioners across political science, public administration, public policy, and history fields.

Issues will cover general interest pieces, applied research, practitioners’ or experts’ analyses, research notes, essays, and book reviews. The first annual “special policy issue” of Commonwealth highlighted educational policies in Pennsylvania. The next special policy issue, which will focus on the environment, will be assembled by a guest editor selected in consultation with the journal’s editor and editorial board. The print “Year in Review” issue will be a compendium of the best articles of the year.

Commonwealth collaborates with the Pennsylvania Policy Forum to plan special issues… The Forum is a consortium of faculty members and academic and policy institute leaders… who share an interest in generating ideas, analyses, and symposiums that might prove useful… in addressing major issues confronting the Commonwealth and its government.

Highlights from  the journal’s Special Issue on Education Policy include:

Commonwealth invited Senator Argall… and Jon Hopcraft… to summarize the argument that the (property) tax is an antiquated and unfair levy and should be abolished. We invited Dartmouth College economist William A. Fischel… to summarize his argument that, compared to statewide taxes, the local levy provides voters – even in households without school children – with stronger incentives to support high quality public schools.

A paper that outlines the rationale behind Student-Based Allocations for Pennsylvania School Districts, and investigates the extent to which the (Basic Education Funding Commission) proposal would allocate funds on the basis of students.

An evaluation of Pennsylvania’s Keystone exams that finds that race, socioeconomic status, and a school’s English Language Learner and special education populations drive performance.

Subscribe at: https://tupjournals.temple.edu/index.php/commonwealth/index