Tax Revolts Aren’t Out of the Question
When states and cities tried to raise revenues during the Great Depression, they sparked a furious backlash.
During the Great Depression, many Americans simply refused to pay their taxes. But that can’t happen again, can it?
Photographer: E+/Getty ImagesThanks to coronavirus-induced declines in tax revenue – and record filings for unemployment benefits – state and local governments are in crisis. Many have underfunded pension systems and few have significant reserves. None can run deficits as readily as the federal government.
Like so much of the economic news as of late, the closest precedent is the Great Depression. In the early 1930s, state and city governments confronted massive budget shortfalls. Attempts to close the gap ended up sparking a movement that was largely forgotten: a massive taxpayer revolt across the nation.