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Taxation, Representation, and the American Revolution

6 min readBy: Jared Walczak

In his day, James Otis was a prominent lawyer, legislator, and Patriot, but today his name is all but forgotten—but when all else fades from memory, words endure. His rallying cry of “taxation without representation is tyranny!” became the watchwords of the American Revolution and remain familiar to our ears. American independence, which we celebrate this week, was born of a taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. 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. Tax burdens in the colonies were incredibly light, far lighter than in England, and woefully insufficient to cover the costs of colonial administration. Nor did the luminaries of the American Revolution operate under the misapprehension that taxes would go down if they won their independence.

Set aside, for a moment, the financing of a long and destructive war. A new nation would receive no subsidies from the mother country; it would likely face an even more punitive tariffTariffs are taxes imposed by one country on goods or services imported from another country. Tariffs are trade barriers that raise prices and reduce available quantities of goods and services for U.S. businesses and consumers. regime than the restrictions under which the colonies already operated; it would have to fund its own administration; and it would have to take up the costs of national defense. Even under the shaky framework of the Articles of Confederation, it was clear from the start that victory in this tax revolt meant paying more in taxes, not less. So why did they do it?

Because, 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.

Taxation and consent have long been entwined, even under relatively unrepresentative governments. There are many things that government can do against the wishes of the people, but taxation is too large an undertaking to be accomplished without at least tacit consent. Throughout history, tax compliance has been the exception rather than the rule. Champions of liberty, moreover, have recognized their power to resist taxation as a vital bargaining chip in securing other liberties.

The withholdingWithholding is the income an employer takes out of an employee’s paycheck and remits to the federal, state, and/or local government. It is calculated based on the amount of income earned, the taxpayer’s filing status, the number of allowances claimed, and any additional amount of the employee requests. of revenues forced King John to parlay with his nobles at Runnymede, yielding Magna Carta. The fight over “ship money”–originally a requirement that coastal cities build and provision ships during time of war, ultimately morphing into a requirement that all communities contribute funds even in peacetime–helped predicate the English Civil War. And the need to impose taxes helped the English Parliament secure its own power.

Originally, parliament held little sway. Kings could ignore them, prorogue them, even arrest their members. What they couldn’t do, at least not easily, was fill their own coffers without the consent of parliament, which is to say, the wealthy landed elite. Parliament after parliament traded its agreement to taxes for increased power over the prerogatives of government.

The colonists knew their English history. Indeed, James Otis wasn’t entirely original; the earliest attested precursors to “taxation without representation is tyranny” came out of the ship money disputes. John Hampden, a future parliamentarian who rose to prominence when he stood trial for refusing to pay ship money, is memorialized in the names of towns in Connecticut, Maine, Maryland, and Massachusetts, and–with fellow parliamentarian Algernon Sydney (also spelled Sidney)–in Virginia’s Hampden-Sydney College. By insisting that taxes only be imposed with the consent of the governed, America’s founders believed they were doing nothing more than vindicating their rights as Englishmen, the latest in a long line of patriots who zealously guarded their ancient liberties.

There can be little doubt that 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.

The system worked for a while. The era of “salutary neglect,” presided over by statesmen like Sir Robert Walpole, saw the colonies barely taxed at all. But as the mother country reeled from one European conflict to another–the War of the Spanish Succession, the War of the Quadruple Alliance, the Seven Years’ War, and others–it fell deeply into debt and increasingly saw the colonies as a way to replenish the Exchequer. The amounts demanded weren’t extreme; indeed, during and after the Seven Years’ War, the high-water mark of supposedly oppressive colonial taxation, the levies weren’t nearly enough to cover the cost of the military defense of the colonies in the North American theater, where the conflict took the form of the French and Indian War.

British debt ran to 140 percent of gross national product, and 45 percent of British tax revenues went to servicing the debt. Effective tax rates in England exceeded 11 percent of national income; in the colonies, they were but a fraction of a percent, and most of that local. Surely, from the British point of view, an additional levy or two wasn’t unreasonable.

But it was never about the money. Frequently, colonial assemblies refused to even remit sums necessary to pay the salaries of colonial governors. It was about a principle: the power of the purse belongs with the people. They saw this not as a new right, but as the rights of Englishmen, a hard-won battle stretching from Magna Carta through the Civil Wars, surviving the Stuart Restoration and coming to full blossom in the Glorious Revolution. It was a heritage, it was a right—and it was being denied them.

Parliament couldn’t see this. The king couldn’t understand. Weren’t the colonists heavily subsidized? This wasn’t how the mercantile system was supposed to work. Colonies were supposed to enrich the mother country, not the other way around, yet here were these colonists, a draw on the country’s finances, and they had the gall to protest–violently protest!–a few stamp duties?

There were solutions, surely. The colonies could elect their own members of parliament, perhaps. Their votes would have been drowned out by those of the English MPs, but there were nearly four times as many residents of the Isles as there were of British North America, and that’s how representative democracy works. If that did not suffice, in the far fringes of debate there were even discussions of a North American parliament.

To the colonists, though, these were sops; neither gave them a meaningful say over their own taxation. Taxation without representation was still tyranny, be those taxes ever so low. Whatever else taxation should be, it had to be by consent. That idea, at once steeped in British history and radically revolutionary, remains an animating principle not only in taxation, but for the whole of the American experiment. That’s something worth celebrating this Independence Day.

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