Taxpayers in Revolt: Tax Resistance During the Great Depression

CHAPTER 7 The Doldrums Set In:
The Decline of the Tax Revolt

The Federal Role

The upturn in the economy ranks as the most obvious factor in improving tax collections. The beginning of a slow improvement in the real estate market by 1933 also should be stressed. Beneath the simple rubric of economic recovery lay the hand of the federal government. It would be hard to overemphasize the importance of federal policies.

Co-opting Resistance

Resisters did have the raw material for a transition program. Nathan MacChesney, for example, publicized a sophisticated critique of the cult of the expert. Adam Schantz showed a highly perceptive understanding of the political economy of bureaucratic expansion. Resisters, in general, advanced a persuasive, if undeveloped, class analysis of tax spenders versus taxpayers. Perhaps these and other ideas could have been the building blocks for a more cohesive ideological vision and ends-oriented program. The potentialities, however, remained unexploited.

The Expert and the Amateur

Municipal reformers and their allies in government, by contrast, had long track records of activism in issues related to government. The National Municipal League, the premier reform organization, dated back to 1895. Many of the state leagues and professional associations for government employees traced their origins to the Progressive Era. During the 1910s and t920s, a long list of universities, including Stanford and the University of Chicago, established programs of public administration. These programs enshrouded the old doctrine of municipal expertise with a cloak of academic prestige.

To make sense of the tax struggles of the 1930s, it behooves us to explore the worldview of advocates of good government. “Constructive economy” and civic-reform ideology were of a piece. The tenets of the constructive economy program had been part and parcel of municipal reform since the rum of the century, including merit hiring, centralized purchasing, consolidation of overlapping governments, and elimination of elective offices. On the surface, these goals seem to have been first and foremost procedural—namely, to perfect the machinery of government. A closer look reveals a larger agenda: expanded spending on welfare, public health, and schools, and more regulation to protect the “public interest.” Achievement of any of these would be impossible without an efficiently functioning government.

Since tax reformers could not abolish elected assessors, they did the next best thing. They sought to check the assessor’s power through the use of a state tax commission. By 1931, the vast majority of states had created tax commissions, often at the behest of municipal reformers. Employment opportunities in great number opened up for the still relatively small corps of public finance professionals. Many leading academicians in the field, including Harold Groves of Wisconsin and Robert Murray Haig and Simeon Leland of Illinois, were able to put theory into practice as members of tax commissions.

To the modern reader, this doctrine may appear rife with antidemocratic implications. Good-government reformers did not see it that way. As heirs of the Progressive Era, they regarded experts in government service as neutral agents of democracy, well equipped because of their training to carry out the collective will of society dispassionately and efficiently. The voters, through their elected representatives, had hired experts. Hence, it would be a needless waste to prevent these officials from using their years of training to the fullest advantage.

Smith, however, greatly overestimated the consistency and depth of the views espoused by resisters in general. Most of them lacked a well-thought-out philosophy of either taxation or strategy. They showed an even weaker grasp of the spending side of the equation. Because the promoters of the tax rebellion had nothing remotely resembling a think tank, they turned by default to groups tike CCCE for research, rationale, and facts. As CCCE’s founders had envisioned, the strategy of co-optation proved a powerful weapon against the tax rebellion.

The Lure of Good Government

The constructive-economy approach offered temptations that taxpayers’ organizations found hard to resist. A frontal attack on specific government services brought with it predictable political risks. Promoting the efficient delivery of these functions, on the other hand, was a different story. Who could object to reducing waste and getting more bang for the buck? Even a Socialist like Daniel Hoan found little to challenge in such goals. If constructive economy was, at least in the short run, the path of least resistance, in the long run, it helped cripple tax revolt. What may have been safe politically proved uninspiring to potential recruits. Even under the best of circumstances, not many people could be expected to charge the ramparts for centralized purchasing.

Only a few supporters of tax rollbacks and reduced government understood the strategic disadvantages of the constructive-economy approach to achieving these goals. One of the more thoughtful and exceptional was journalist Caret Garrett, a writer for the Saturday Evening Post. Until his death in 1954, Garrett fought a continuing rearguard struggle against the mounting power of the state. In June 1932, he addressed the economy question in a highly perceptive piece, “Insatiable Government,” for the Saturday Evening Post. Garrett scrutinized the issues at hand with a penetrating and, despite his very real biases, dispassionate style.

Other states and localities duplicated many attributes of the Massachusetts experience. If anything, the descent in tax-resistance fortunes elsewhere seems to have been more precipitous. Like the MFTA, the state groups that still survive long ago purged their programmatic agendas of “destructive” tendencies. Holdovers from the 1930s include the Wisconsin Taxpayers’ Alliance, the Minnesota Taxpayers’ Association, the California Taxpayers’ Association, and the New Jersey Taxpayers’ Association. Several of these groups that were started as “destructive” became “constructive” and now are purely research and nonpolitical organizations. By and large, they only faintly reveal their tax-revolt origins.