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Annals of the taxpayer rebellion |
Twenty years ago this June, California voters approved Proposition 13, the property-tax-cut **initiative** that fired the first salvo in what would become a full-scale American tax revolt.
The good news is that the tax revolt remains as popular now as it was 20 years ago. Despite two decades of attacks from liberals, a new Field Poll in California finds that Proposition 13 would still win by a large majority if were on the ballot today.
The even better news is that Proposition 13 has triggered a tectonic shift in American politics, threatening to erode the very ground underneath Big Government. After Proposition 13 passed in California, it was immediately copied by several other states, including Michigan and, most improbably, Massachusetts. Within two years, 43 states had implemented some kind of property tax limitation or relief, 15 states lowered their income tax rates, and 10 states moved to index their income taxes for inflation.
On a grander scale, the tax revolt provided fresh fuel to the nascent supply-side economics movement and helped put Ronald Reagan in the White House. It was no coincidence that the ascent of the Republican Party from the ashes of Watergate coincided with the start of the tax revolt.
In the years since Proposition 13, the tax revolt has done more than produce one-time tax cuts. It has led to a series of tax- and spending-limitation laws that act as a permanent brake on the growth of government. Fourteen states now have "supermajority" requirements for all tax increases - that is, tax rises can only pass with a two- thirds or three-fourths majority of the state legislature or the voters themselves. Three states - Colorado, Florida and Missouri - require voter approval for any new taxes. Other states, most notably New Jersey and Michigan, are contemplating the adoption of similar measures.
Separate studies by Dan Mitchell of the Heritage Foundation and Dean Stansel of the Cato Institute have found that taxes and spending grow slower in states with supermajority requirements than in those without them. Mr. Mitchell found that between 1980 and 1992, tax revenues grew about 20 percent less in supermajority states, while spending grew 9 percent less. Economic growth in supermajority states was 8 percent higher, and job growth was 5 percent higher. Some of this difference can be attributed to other factors, of course, such as the fact that Washington and Florida have no state income tax.
Mr. Stansel examined all tax and spending limits - not just supermajority requirements - during the five years preceding and following each state's adoption of such limits. He found that states with tax and spending limits saw their spending grow 0.8 percent faster than the U.S. average before they adopted limits. After they adopted limits, spending grew 2.9 percent slower than the national average.
A second means of institutionalizing the tax revolt is the effort by Americans for Tax Reform (ATR) to extend its "no tax pledge" - a promise by lawmakers to vote against any new taxes or tax increases - to the states. As of June 1, more than 1,000 state officeholders have signed the pledge.
Liberals have been hoping for years that the tax revolt would slowly fade away, but in fact the conditions are building for another taxpayer blow-up. The federal tax burden as a share of national income has crept up to its highest level in three decades, and the New Republic recently offered a forecast of where the next spark might come from: America's 25 million self-employed and independent contractors.
The growing ranks of independent workers are "the seeds of what may be America's next tax revolt," the magazine says. The self- employed are responsible for the full Social Security and Medicare payroll tax (15.3 percent compared to 7.65 percent for those who work for an employer), get a much smaller tax break on health insurance, and must file tax returns four times a year. "You can almost hear the rumble of a tax rebellion in the making," the magazine continues.
"The politician who finds a way to address the concerns of these new tax protesters may find himself the darling of a constituency whose allegiance is as yet unclaimed and whose numbers are large enough to sway elections."
What's most amazing is that the author of this critique is Daniel H. Pink, the former chief speechwriter for Vice President Al Gore. A sign, perhaps, that liberals are getting fed up with taxes too.
Steven Hayward is a Bradley fellow at the Heritage Foundation and senior fellow at the Pacific Research Institute. This article was adapted from one that appears in the July-August issue of Policy Review: The Journal of American Citizenship.
(Copyright 1998) {A4:Washington Times-0627.00734} 06/27/98