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 occurred at the local level and especially squeezed the resources of real-estate taxpayers. Local tax delinquency rose steadily from a median of 10.1 percent in 1930 to 26.3 percent in 1933.
Many Americans reacted to these conditions by forming taxpayers leagues to call for lower taxes and cuts in government spending. These organizations were relatively rare before the Depression but soon became commonplace. By some estimates, there were three thousand of them by 1933. Thomas Reed, a leading political scientist, lamented that taxpayers groups "spring up like mushrooms, every time you go out in the morning, you find more of them," while the American Library Association Bulletin observed that the "taxpayer is indeed in revolt. Local and state taxpayers leagues multiply." The banner year for such organizations was 1933, with several hundred formed in the spring alone, according to an estimate by Howard P. Jones of the National Municipal League.
Taxpayers leagues endorsed such measures as laws to limit and roll back 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. The National Association of Real Estate Boards provided a limited degree of interstate coordination by establishing property owners associations.
Although 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, and a weekly radio show.
By late 1933, the taxpayers leagues had entered a period of decline. The circumstances that had nurtured revolt were undermined as economic conditions gradually improved, the federal government extended aid to homeowners, and local governments reduced their 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. In Newark, New Jersey, and other cities, groups ranging from the Bankers Trust to various teachers unions organized Pay Your Taxes campaigns that used a combination of door-to-door solicitation, threats of coercion, and inducements, such as installment payment plans, to collect back taxes. Members from the same groups formed the basis of the Citizens Councils for Constructive Economy. One strategy of the Citizens Councils was to co-opt more radical forms of tax resistance and budget cutting by emphasizing reforms, such as centralized purchasing, which would make government more efficient rather than reduce its size.
See Also: TAXATION.
Beito, David T. Taxpayers in Revolt: Tax Resistance during the Great Depression. 1989.
Thornton, Mark, and Chetley Wise. "The Great Depression Tax Revolts Revisited." Journal of Libertarian Studies 15, no. 3 (2001): 95–105.
David T. Beito