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October 30, 2008
The Meaning of a Tax Revolt
Joseph J. Thorndike

Full Text Published by Tax AnalystsTM

The Meaning of a Tax Revolt

Isaac William Martin, The Permanent Tax Revolt, (2008: Stanford University Press, Palo Alto, Calif.) (264 pages, $55 hardback, $21.95 paperback).


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Thirty years ago, California voters approved Proposition 13, capping property taxes and recasting the fiscal landscape for decades to come. It was a crucial victory for the conservative movement and a watershed in American political history. The success of Proposition 13 signaled the end of the New Deal order and the start of a Republican ascendancy.

Or maybe not. For decades, the passage of Proposition 13 has served as a creation myth for the modern conservative movement. And not without cause: The ballot initiative certainly presaged a new era in American politics.

But Proposition 13 was not a grass-roots revolt against big government, at least not originally. As sociologist Isaac Martin points out in his outstanding new book, The Permanent Tax Revolt, it arose from a heterogeneous movement populated by liberals and conservatives.

Martin's book complicates our understanding of the California tax revolt, as well as similar movements that swept the nation in the 1970s. Tax revolts, like all historical phenomena, are complex, contested, and sometimes incoherent. They are not simply or always a protest against big government.

Hidden Social Policy

In California, for instance, the tax revolt represented -- at least for some of its early leaders -- an embrace of activist government. Taxpayers were alarmed by official efforts to standardize and modernize property assessments. In particular, they feared the demise of fractional assessment, which kept a lid on tax bills while also serving as a form of hidden social policy. "By subsidizing homeownership," Martin writes, "fractional assessment provided a valuable form of protection against the risk of income shocks, whether those shocks were due to unemployment, sickness, or retirement."

In other words, homeownership allowed lower- and middle-income people to accumulate a nest egg (albeit a relatively illiquid one). And when the end of fractional assessment threatened that nest egg -- and the means of adding to it -- they rebelled.

These tax revolters were not driven by a belief in small government or a rejection of the welfare state. Indeed, they mobilized to defend their stake in that state.

Eventually, the California tax revolt took on a different cast, taking its leadership from conservative activists who saw the movement as a challenge to big government. Howard Jarvis and the champions of Proposition 13 did not simply seek the preservation of an informal tax preference, but the hobbling of state government. And when the initiative passed, conservatives across the nation used it to reshape tax revolts in their own communities.

Martin's book reminds us, however, that California's tax revolt was not some sort of conservative cri de coeur, at least at the start. Much of the support for antitax ballot measures arose from less-than-conservative inclinations among the electorate. To underscore this point, Martin describes the policy alternatives -- tax rate graduation, for instance, or property classification -- that might have protected homeowners from rising tax bills without hobbling state and local government.

The Great Misunderstanding

The success of Proposition 13 overshadowed those alternatives -- in large part because political leaders in both parties misinterpreted its meaning. Republicans hailed it as a triumph of antigovernment ideology at the grass-roots level, and Democrats were inclined to agree. "I do believe that Proposition 13 is an accurate expression of, first of all, the distrust of government," declared President Jimmy Carter.

In the decades to come, this oversimplified interpretation of the tax revolt remained an article of faith for both parties. Republicans made it the foundation of their political ascendancy, successfully recasting the national political debate in terms profoundly unpleasant for most Democrats. No one wants to stake out the ground against tax cuts, especially when everyone agrees that the American people have demanded them at the voting booth.

Martin's book clarifies our understanding of modern tax politics. Its emphasis on the bipartisan misinterpretation of the tax revolt helps explain the apparent incoherence of modern federal politics, with voters supporting both tax cuts and activist government; as it turns out, tax revolts can sometimes be mounted in defense of big government, not in opposition to it.

Martin's book also illuminates the democratization of tax policy, a policy arena long dominated by elites. And it goes a long way toward explaining the modern conflation of tax reform and tax reduction -- something with important ramifications for future policymaking.

That said, Martin's argument is problematic on the margins. He convincingly challenges the notion that Americans are inherently and uniquely antigovernment, and his focus on the progressive strain in tax resistance is vital. But I'm less than convinced that the tax revolt was principally a cry for protection from the free market, even among liberals. Can we really distinguish a protest against taxes from a protest against government? Were disgruntled property owners looking to government for protection from the market, or were they seeking -- through social action -- protection from government itself? After all, it wasn't the market asking for more tax revenue, it was government. There is, in fact, a predatory quality to taxation, and tax revolts seem inherently antigovernment. At least they do to me.

There is some sort of middle ground here. We can appreciate the not-necessarily-conservative origins of the property tax revolt, and we can agree that many early tax protesters were advocates of activist government. But the tax revolt was still a critique of government action -- even at the start. And that critique includes an element of distrust that strikes me as an important element of antistatism.

Martin also overstates the role of the state tax revolts in shaping federal tax politics. They certainly played a vital role. But the federal tax debate over the past 30 years can't be explained solely -- or perhaps even principally -- as a function of state-level arguments. We need to account for a range of other issues: the proliferation of tax preferences, the inexorable increase in complexity (both real and apparent), the growing burden of Social Security taxes, the inherent intrusiveness of the income tax, and failure to keep the estate tax (and more recently, the alternative minimum tax) focused on the rich rather than letting it bleed into the middle class.

Martin would not deny the importance of these factors. But in the service of a strong argument, I think he overstates his case. It was the intersection of state-level tax protests with other trends on the federal level that combined to create the virulent antitax politics that we've witnessed in Washington.

But these are quibbles, not serious complaints. Martin has written the definitive account of the 1970s tax revolt. He has reminded us, above all, that we shouldn't take for granted the myth of the antitax American. If we want to explain the antitax politics of the last 30 years, we can't simply offer up allusions to the Boston Tea Party and the Whiskey Rebellion. Tax revolts are not always what they seem.


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Joseph J. Thorndike is a contributing editor for Tax Analysts.