Taxes are too high in America. They will always be too high for a people jealous of their freedoms and who understand how the nation built its prosperity. But we can clearly see on this July 4, 2018, that the nation is moving towards the America envisioned by the Boston Tea Party revolutionaries and away from the sclerotic excessive government that has built up like barnacles on the side of a ship.
The United States of America was born of a tax revolt.
Some place the start of that revolution with the Boston Tea Party of December 16, 1773 when Massachusetts colonists dumped British tea into Boston Harbor in the world’s most famous tax revolt.
But America’s opposition to taxes in all sizes, shapes and forms played a key role in the colonies long before Samuel Adams and his Sons of Liberty.
The 1629 Charter of Massachusetts Bay granted settlers a seven-year exemption from customs taxes on all trade to and from Britain and a 21-year exemption from all other taxes. In 1621, the Dutch government granted the Dutch West India Company an eight-year exemption from all trade duties between New Amsterdam/New York and the mother country. Swedish settlers in Delaware were offered a 10-year tax exemption. America, in other words, was in part created as a tax haven populated with immigrants moving from high-tax nations to low-tax colonies.
Low-taxed Pennsylvania was founded by William Penn, the father of American religious liberty, who also notably refused the Pennsylvania General Assembly’s kind offer to establish an import and export tax for his personal benefit.
Yes, people everywhere have complained about the tax burden, but Americans have shown themselves more jealous of their liberty and freedom from oppressive taxation than others.
In 1714, British citizens in Great Britain were paying on a per capita basis 10 times as much in taxes as the average “American” in the 13 colonies, though some colonies had higher taxes than others. Britons, for example, paid 5.4 times as much in taxes as taxpayers in Massachusetts, 18 times as much as Connecticut Yankees, 6.3 times as much as New Yorkers, 15.5 times as much as Virginians; and 35.8 times as much as Pennsylvanians. But it was the “undertaxed” colonists who revolted, not Londoners.
Taxation in the colonies consisted of property taxes, poll taxes on men over 18, excise taxes, and forced labor contributions of a few days a month to build roads and assume other “public functions” such as constable, assessor, or “hog reeve” (“an officer charged with the prevention or appraising of damages by stray swine,” according to the Oxford English Dictionary).
The tendency of the state to grow at the expense of liberty started early, even in the New World.
Massachusetts imposed an embryonic income tax in 1634 in the form of a “faculty” tax. In 1643, Alvin Rabushka writes in Taxation in Colonial America, “assessors were appointed to rate inhabitants on their estates and their faculties, which included personal abilities.” One notes with some envy that the tax came to about 1 percent of what we might call income.
Connecticut, anticipating New York Mayor Michael Bloomberg’s nanny-state tendencies, imposed sumptuary laws in 1676 that taxed any person who wore silk ribbons, gold or silver lace, or gold or silver buttons.
By 1775, the British government was consuming one-fifth of its citizens’ GDP, while New Englanders were only paying between 1 and 2 percent of their income in taxes. British citizens were also weighed down with a national debt piled up by years of worldwide warfare that amounted to £15 for each of the crown’s eight million subjects, while American local and colonial governments were almost debt-free. Against this backdrop, Americans watched as the British monarchy attempted to raise taxes on the colonists to pay down its war debt and pay for the 10,000 British soldiers barracked in the colonies.
Surely, the Americans would not begrudge the King a demand that they pay increased taxes for all the benefits of being part of the British empire.
The first effort was The Sugar Act of 1764, a rewrite of the Plantation Duty of 1673, was designed to raise revenue rather than force the colonies to trade with England alone, and fell mostly on molasses, sugar, and Madeira wine. The colonies reacted particularly poorly to the imposition of the Stamp Act of 1765, which was an effort to impose a direct tax on the colonies rather than tax imports and exports. Benjamin Franklin and others argued to the British government that while the colonies did not object to tariffs, they did oppose direct domestic “taxation without representation.”
The British parliament got the message, repealing the Stamp Act and responding with the Townshend Acts of 1767, which imposed duties on 72 items, including tea (the changes actually reduced taxes on tea originally imported from British colonies to combat the smuggling of Dutch tea to America). Although the British repealed most of these duties in 1770, they maintained the specific tax on tea to make the point that the crown could tax when it chose to do so. By then, however, the American colonists had stopped distinguishing between domestic and trade taxes and started opposing all taxation and control by Britain, setting the stage for the revolution.
The bottom line: American colonists were both paid more and taxed less than the British. American taxes, in fact, were low and going lower, but the very idea that they had been raised and could be raised again by a distant power was enough to send Americans into the streets to engage in civil disobedience. Regime change followed the tax revolt.
And 245 years later, what has changed?
Americans are still wealthier and taxed less than the citizens of other nations. By some measures, federal taxes are lower today than they were in the past: Today’s top marginal tax rate for individuals is 37 percent, which is higher than Ronald Reagan’s 28 percent but lower than Dwight Eisenhower’s 90 percent. State and local taxes, meanwhile, have undoubtedly been trending upward.
The modern “Tea Party” movement that elected a Republican House and Senate during Barack Obama’s presidency responded to three threats.
First, Obama unleased a $878 spending “stimulus” package and increased total spending another $1 trillion over ten years.
Second, Obama demanded the passage of Obamacare with 20 new and higher taxes. Most of these taxes directly hit the middle class.
Third, Obama spent the rest of his presidency demanding more than $1 trillion in higher taxes over the next decade.
Higher taxes brought a Republican House, (2010) Senate (2014) and Presidency (2016) just as they had flipped the House and Senate in 1994 following the Bill Clinton Spending stimulus bill and his 1993 tax hike on energy and incomes.
Americans in 1994 and 2010 sounded a great deal like John Adams denouncing the Sugar Act for imposing “enormous taxes, burdensome taxes, oppressive, ruinous, intolerable taxes.”
This last December Congress passed and the President signed a roll back of many of the taxes imposed by Clinton and Obama. The corporate income tax, then at 35% the highest in the world, was dropped to 21%. Every American saw their marginal tax rate fall. The 28 million small businesses were targeted for further rate reduction. The Death Tax imposed to pay for the Civil War (and repealed), the Spanish American War (and repealed) and World War One (never repealed) was dramatically cut back. The Alternative Minimum Tax (AMT) put in to punish 155 individual taxpayers had grown to hit more than 4.5 million Americans was reduced to harassing 200,000.
Taxes are too high in America. They will always be too high for a people jealous of their freedoms and who understand how the nation built its prosperity.
But we can clearly see on this July 4, 2018, that the nation is moving towards the America envisioned by the Boston Tea Party revolutionaries and away from the sclerotic excessive government that has built up like barnacles on the side of a ship.