By Robin Einhorn (Click here to view the entire P&R issue)
The evidence is clear, especially around April 15: With a passion, Americans hate everything about taxation. We sometimes tell pollsters we are willing to pay higher taxes to get better public services from our governments (schools, roads, and so on), but, in a “read my lips” political culture, no campaign promise works better than the promise to cut taxes.
Americans are easily persuaded of our desperate need for “tax relief,” but the fact is that our taxes are low relative to other nations. According to the Organization for Economic Co‑operation and Development (OECD), American governments (federal, state, local) take less of our incomes in taxes than the governments of other countries with comparable economies. In 2002, American taxes amounted to 26% of GDP. This was only half the burden in the true high‑tax countries, Sweden (50%) and Denmark (49%), and well below the average for the 30 OECD member countries (36%).
Most Americans would probably agree that our hatred for taxes has something to do with a more profound aversion to government in general, an aversion with deep roots in our history. A nation founded in a tax revolt, we are told, is true to itself only when it is “starving the beast.” Yet the original revolutionary objection was never to taxes in general, much less to government in general. It was to taxation without representation [shades of DC‑ed.] and government by a faraway empire.
Nevertheless, Americans are right to think that our anti‑tax and anti‑government attitudes have deep historical roots. Our mistake is to dig for them in Boston. We should be digging in Virginia and South Carolina rather than in Massachusetts or Pennsylvania, because the origins of these attitudes have more to do with the history of American slavery than the history of American freedom. They have more to do with protections for entrenched wealth than with promises of opportunity, and more to do with the demands of privileged elites than with the strivings of the common man. Instead of reflecting a heritage that valued liberty over all other concerns, they are part of the poisonous legacy we have inherited from the slaveholders who forged much of our political tradition.
The Role of Slavery
Slavery was a major institution in the American economy, slaveholders major players in American politics, and major political decisions, such as tax decisions, always had to take these facts into account. To tell a story about early American political history that ignores slavery is to miss what often was the very heart of that story.
It might seem strange to trace our anti‑tax and anti‑government ideas to slavery instead of to liberty and democracy. Isn’t it obvious that a democratic society where “the people” make the basic political decisions will choose lower taxes and smaller governments? The short answer is no. In this democratic society, the people might decide to pool their resources to buy good roads, excellent schools, convenient courthouses and an effective military establishment. But slaveholders had different priorities than other people and special reasons to be afraid of taxes. Slaveholders had little need for transportation improvements (since their land was often already on good transportation links such as rivers) and hardly any interest in an educated workforce (it was illegal to teach slaves to read and write because slaveholders thought education would help African Americans seize their freedom). Slaveholders wanted the military, not least to promote the westward expansion of slavery, and they also wanted local police forces (“slave patrols”) to protect them against rebellious slaves. They wanted all manner of government action to protect slavery, while they tended to dismiss everything else as wasteful government spending.
But the crucial thing was the fear. Slaveholders could not allow majorities to decide how to tax them, even when the majorities consisted solely of white men. Slaveholders occasionally supported lavish government spending, but they would never yield the decision‑making power to non‑ slaveholding majorities. Recognizing that the power to tax was “the power to destroy,” they could not risk the possibility that non‑slaveholding majorities would try to destroy slavery, even when the non‑slaveholders insisted on their loyalty to the “peculiar institution.” As a Virginia planter phrased it in 1829, opposing a reform that would have granted a non‑ slaveholding majority its fair share of seats in the state legislature, this was a flat‑out rejection of anything that “put the power of controlling the wealth of the State into hands different from those which hold the wealth.” It was a flat‑out rejection of democracy.
Before the Civil War, slaveholding “masters” often dominated the political terrain. It was no accident that the first Southern representative to issue a secession threat was a signer of the Declaration of Independence. On July 30, 1776, less than a month after adoption of the Declaration, Thomas Lynch of South Carolina issued an ultimatum: “If it is debated, whether their Slaves are their Property,” Lynch warned, “there is an End of the Confederation.” Unless Congress agreed to stop talking about slavery, Lynch was saying, the United States would survive for a total of only three weeks!
Congress was not talking about slavery in July, 1776 because its members were abolitionists who wanted to act on the promise of the Declaration. That was not the problem at all. Congress was talking about slavery because its members were framing a national government for the new nation ‑‑ what would become the Articles of Confederation. Trying to figure out how to count the population to distribute tax burdens to the various states, the members inevitably faced the problem of whether to count the population of enslaved African Americans. Since slaves were 4% of the population in the North (New Hampshire to Pennsylvania) and 37% of the population in the South (Delaware to Georgia), this decision would have a huge impact on the tax burdens of the white taxpayers of the Northern and Southern states. Predictably, Northerners wanted to count the total population (including slaves) while Southerners wanted to count only the white population. As the members jostled with each other over this basic conflict of interest, they began to justify their positions by making claims about whether slavery was profitable and therefore made a state able to pay higher taxes (Northerners said yes, Southerners said no). The important point, however, is that once this issue had been opened it was impossible to prevent discussions of the injustice of slavery itself in a Congress that had just declared that “all men are created equal.” When Congress finally held this debate in 1783 (by which time the Confederation was all but bankrupt), it hammered out the infamous fraction that later entered the Constitution as the three‑fifths rule for apportioning “representatives and direct taxes.”
Variations on this problem would recur over and over again. Every time Northerners and Southerners had to make a national decision together, they found themselves forced to talk about the practical implications of a sectionalized institution of slavery. These were debates about the implications of slavery for whites rather than about the liberation of African Americans. The problem was institutional rather than ideological, built into the very structure of the nation itself because the United States was half slave and half free. Every time a discussion of this kind began, slaveholders worried that non-slaveholders would try to abolish the institution of slavery by imposing prohibitive taxes on slaves. Thus, at the Virginia convention that debated the ratification of the U.S. Constitution in 1788, Patrick Henry worried about a federal slave tax hefty enough to “compel the Southern States to liberate their negroes.”
Whether they were worrying about the federal government or about the governments of their own states, slaveholders developed three solutions to this general problem. First, they tried to guarantee that they dominated the legislative process by manipulating the representation rules. Second, they demanded weak governments that would make few of the decisions that provoked discussions of slavery. Third, they insisted on constraining the tax power through constitutional limitations on its use. Regardless of which of these strategies they were pursuing at a particular moment, slaveholders were always trying to prevent non‑slaveholding whites from talking about how the institution of slavery harmed them. The goal was always to prevent situations in which the non‑slaveholders would think about taxing the institution of slavery out of existence.
The Slaveholders’ Real Victory
Yet the real slaveholder victory lay in a fourth strategy: persuading the non‑slaveholding majorities that the weak government and constitutionally restrained tax power actually were in the interests of the non-slaveholders themselves. Pro‑slavery representation rules—the three‑fifths clause of the U.S. Constitution and similar devices within Southern states—became necessary compromises with slavery, but the other two solutions to the slaveholders’ political problem became protections for the “common man.” Majorities voluntarily renounced the right to regulate their society by majority rule. Giving up the essence of democratic self‑government, they celebrated the outcome as democracy. The consequences would outlive the slaveholders who played such a large role in establishing this attitude toward government and taxation. Long after slavery was gone, a regime forged around preferential treatment for the slaveholding elite came to favor very different elites: commercial and industrial elites who shared little with their slaveholding predecessors except a demand that majorities renounce their right to govern what ostensibly was a democratic society.
The irony is that the slaveholding elites of early American history have come down to us as the champions of liberty and democracy. In a political campaign whose audacity we can only admire, charismatic slaveholders persuaded many of their contemporaries, and then generations of historians looking back, that the elites who threatened American liberty in their era were the non‑slaveholders! Today, this brand of politics looks eerily familiar. We have experience with political parties that attack “elites” in order to rally voters behind policies that benefit elites. This is what the slaveholders did in early American history, and they did it very well. Expansions of slavery became expansions of “liberty”; constitutional limitations on democratic self‑government became defenses of “equal rights”; and the power of slaveholding elites became the power of the “common man.” In the topsy‑turvy political world we have inherited from the age of slavery, the power of the majority to decide how to tax became the power of an alien “government” to oppress “the people.”
Robin Einhorn is Professor of History at the University of California-Berkeley, where she specializes in U.S. political and urban history. Her 1991 book, Property Rules: Political Economy in Chicago, 1833-1872 (Univ. of Chicago Press), is about the politics of public works financing. This article is a precis of her 2006 book, American Taxation, American Slavery (Univ. of Chicago Press). email@example.com