Taxpayers in Revolt: Tax Resistance During the Great Depression

The Crash of 1929, and the economic collapse that followed in its wake, sparked a revival of taxpayers’ revolts throughout the country. Between 1932 and 1934, seven states put into place overall limitations on the general property tax (meaning both real and personal property); six through popular initiative and one by a vote of the state legislature. Several dozen similar limitations won enactment at the local level. In addition, every state and hundreds of counties witnessed the formation of taxpayers’ and economy leagues. Measured in numbers of organizations, the tax revolt of the 1970s and 1980s looks puny by comparison.

The tax strike was the most serious weapon of resistance. Although taken seriously, and threatened often, an organized tax strike rarely took hold. One place where it did was Chicago. From 1930 to 1933, Chicago was the scene of one of the largest illegal tax boycotts in American history. At its pinnacle, the organization that led the strike, the Association of Real Estate Taxpayers (ARET), had a paid membership of 30,000 and a budget of $600,000.

The credentials of Long and Coughlin as opponents of big government have been rightly questioned by historians. Less open to dispute is the centrality of this sentiment to depression-era tax revolts. The dedication of the tax rebel to limited government was rarely consistent and well thought out. Those who resisted taxes were, for the most part, political amateurs. They railed sincerely against high taxes, political paternalism, and grafting bureaucrats, but often fell short when it came to formulating their own proposals for retrenchment in government. Frequently, the tax rebel did not have a systematic philosophy as such but rather a set of loosely connected and sometimes murky attitudes about the need to curb government’s power. For reasons we shall see, this lack of a clear-cut agenda contributed to the ultimate undoing of the tax revolt of the 1930s.

Confronted by the greatest tax crisis of the twentieth century—perhaps since the American Revolution—opinion molders of the depression era could not afford to avoid the relationship between taxation and legitimacy. To scores of reformers, public finance economists, bankers, and businessmen, taxation had an intimate connection with the survival of government itself. In localities far and wide, they took the leadership in unprecedented “pay-your-taxes” campaigns, which were nothing less than undisguised advertisements, backed up by threats of force, to bolster state legitimacy.

Conflicts over taxation brought to light differing conceptions of the state’s proper role in society. True to their roots in the Progressive Era, the civic reformers, academics, and officials of professional government associations who led the fight against tax resistance applauded the expansion of government. They conceived of government as the cooperative manifestation of society’s will. Government, especially if efficiently administered, was a necessary, positive tool to fight poverty, ensure public health, provide sanitation, and promote economic planning. For them, expanded government and advancing civilization were inseparable.

The promoters of tax resistance were often less clear and resolute in their philosophy. In general, however, they upheld a more constrained or negative conception of the state. Most tax resisters looked with skepticism on government’s expansion beyond providing courts, police, and national defense. They feared that, unless limited in its power to tax, government would become the protector of entrenched special interests, retard economic recovery, and sap individual autonomy. In contrast to their opponents, tax resisters argued that government could best fight the depression by deflating to the same level as the economy. Indeed, many resisters blamed excessive taxes and spending for causing the depression in the first place.

The taxpayers’ revolt of the 1930s gives the historian a window into a whole set of larger questions. Do political and economic classes play any role in tax crises and, if so, how do these classes arise and how are they constituted? How do governments maintain authority and legitimacy when their source of money is challenged? Lastly, a study of depression-era tax resistance challenges prevalent historiographical interpretations of the vitality and continuity of popular wariness of big government during the worst years of economic decline in American history.