Second, as Voltaire wisely observed, it is immoral and unpopular to give special tax breaks to those with political power and influence.
The French Revolution isn’t the only example from history of how taxes change behavior.
Consider the American revolution, which was based in part on the principle of no taxation without representation. Here are some excerpts from an article by Jared Walczak.
American independence…was born of a tax revolt. That revolt had little to do with tax rates. Oppressive levels of taxation have fomented other rebellions, but not this one. The truth is, colonists paid very little in taxes, directly or (more frequently) indirectly. …for champions of American independence, the problem was not that taxes were high, but that they were arbitrary, occasionally capricious and punitive, and most importantly, adopted without the consent of the governed. …taxes hold pride of place in the causes of the American Revolution. Colonists protested the Stamp Act and the Navigation Acts; they rechristened one set of parliamentary enactments the Intolerable Acts, which left little room for interpretation; they boycotted dutiable goods; led by troublemakers like Samuel Adams and John Hancock, they turned to smuggling to evade tariffs; and, of course, they brewed their tea in Boston Harbor. Clearly, the colonists did not care for British taxes. But mainly, they did not care for the fact that they weren’t consulted about them.
Tax policy has caused upheaval and change in many nations. You can read some of that history here, here, and here.
Taxation and taxpayer unrest also can have a profound impact on local government.
In its initial phase, the Depression also spawned a powerful movement for smaller government that included tax revolts. …Local property tax delinquency rose to a record (still standing) of 26.3% in 1933, from 10.1% in 1930. In many places, the tax system broke down and payment became almost voluntary. Throughout the country, Americans formed “taxpayers’ leagues” to demand spending cuts, arguing that since they had tightened their belts, politicians should too. …Because of tax league pressure, 19 states and numerous localities brought property levies under control by capping mill rates or limiting overall property taxes to a percentage of assessed value. …the Association of Real Estate Taxpayers in Chicago…led one of the largest tax strikes in American history. …The strikers so angered Mayor Anton Cermak in 1932 that he threatened to cut off their city water. During a special visit to Washington, D.C., Cermak implored Congress to send “money now or militia later.”
The best outcome of the Chicago revolt, as Beito noted in a 2024 article, is that the city was forced to reduce its budget by a third.
The Tax Foundation has many examples, but let’s consider the infamous window tax in England. Here are some excerpts from an article from the London-based Adam Smith Institute.
The Window Tax was initially levied in two parts. People had to pay 2 shillings annually (a tenth of a pound) per house if they had fewer than 10 windows, 6 shillings if they had between 10 and 20, and 10 shillings for those with more than 20 windows. In current values, 2 shillings then would be worth about £13.50 now. Of course, taxes change behaviour, and dynamic models must take this into account. The tax did not raise the hoped-for sums because many people responded to it by bricking up some of their windows in order to avoid it. Visitors to Britain stare in fascination at some of our old houses, noting that where there was clearly once a window, there are now bricks or plaster. Sometimes this can be seen in whole rows of terraced houses. New houses were built with fewer windows to avoid the tax. …The Window Tax was unpopular, because it was seen by some as a tax on “light and air.” The tax was increased many times, especially during the wars with France, but it was halved by the reforming administration of 1823, and ended altogether in 1851 after popular agitation.
I’ve seen bricked-up windows on various trips to London, but never thought to take a photo.
Here are some passages from a 2017 article in Smithsonian.
…in 1698, Tsar Peter I—known as Peter the Great—established a beard tax. …Peter I embarked on an ambitious project of modernizing Russia so that it could compete with the European superpowers. …Among his reforms, he revised Russia’s calendar, introduced changes to the way Russian was written, completely changed the military and tried to get Russians to go beardless, like the “modern” Western Europeans… As the State Department describes, “for nobility and merchants, the tax could be as high as 100 rubles annually; for commoners it was much lower — as little as 1 kopek. Those paying the tax were given a token, silver for nobility and copper for commoners.”
Since there’s no data on the percentage of men with beards before and after the tax, it’s impossible to know whether there was mass compliance or mass non-compliance.
Let’s wrap up. The moral of the story is that our friends on the left are wrong for thinking taxes don’t matter. If my series on marginal tax rates (here, here, here, and here) wasn’t convincing, maybe today’s column will be more persuasive.
Dan Mitchell is co-founder of the Center for Freedom and Prosperity and Chairman of the Board. He is an expert in international tax competition and supply-side tax policy.
