Source: Bruce J. Schulman. The Seventies - The Great Shift
in Culture, Society, and Politics (2001)
in Culture, Society, and Politics (2001)
Outside of CA, the media immediately interpreted Proposition 13 as the beginning of a national tax revolt. Gallup conducted polls that indicated that citizens supported measures such as Prop 13 by 2+ to 1. The New York Times referred to the development as a “Modern Boston Tea Party”, and the conservative economist Milton Friedman was beyond-giddy at the prospect of a spreading tax revolt. From 1978 through 1981, a dozen states, starting with TN (which was before CA) approved spending limits on its state government. In 1979, CA approved Proposition 4 by an overwhelming majority. Prop 4 was an amendment to the CA constitution that capped state/local spending, only allowing increases based on inflation and/or population growth. Prop 4 also mandated budget surpluses to be returned to CA taxpayers.
The anti-tax fervor that swept the nation so frightened elected officials that most state legislatures voluntarily cut property taxes, hoping to avoid fiscal straitjackets such as Propositions 13 and 4. In the immediate aftermath of Prop 13, 37 states reduced property taxes, and 28 cut their state income tax. In 1978, Newsweek reported that, state/local governments collectively held over $8B in surplus, but by the end of 1979, the same entities were $6B in debt. States that are today deep in debt, such as CA and IL, can trace their situation to the late-1970s and the conservative anti-tax revolt.
The anti-tax fervor that swept the nation so frightened elected officials that most state legislatures voluntarily cut property taxes, hoping to avoid fiscal straitjackets such as Propositions 13 and 4. In the immediate aftermath of Prop 13, 37 states reduced property taxes, and 28 cut their state income tax. In 1978, Newsweek reported that, state/local governments collectively held over $8B in surplus, but by the end of 1979, the same entities were $6B in debt. States that are today deep in debt, such as CA and IL, can trace their situation to the late-1970s and the conservative anti-tax revolt.
After Prop 13 the focus shifted to liberal MA and Proposition 2.5. As in CA, MA had high property taxes which hit homeowners very hard. The MA state legislature had multiple chances to stay ahead of the situation and blunt the charge of the anti-tax forces in the state. However, the MA legislature dropped the ball in terms of being proactive, stealing the thunder from the anti-tax forces by voluntarily reducing property taxes. The MA state legislature’s inaction wasn’t the tipping point, in that the level of antipathy against property taxes in MA was nowhere near the level in CA, and the only way to gain relief was via the initiative. Also, Prop 2.5 never would have been voted in without Prop 13 in California.
In MA, the Citizens for Limited Taxations (CLT) focused on gaining the support of ordinary taxpayers, stating that the pensions of public employees were far too generous and burdensome. The CLT also argued that most state services weren’t necessary, such as state funded swimming pools for high schools. The major factor for the passage of Prop 2.5 was MA’s growing technology industry, which heavily funded the campaign for Prop 2.5. MA voters approved Prop 2.5 in November 1980. Prop 2.5 capped property taxes at 2.5% of the fair cash value of the home at the local tax base, and it also limited tax increases to 2.5% a year, with no exceptions for inflation or population growth. If CA ignited the tax revolt, MA legitimized it, in that if liberal MA passed such an initiative, then no state was immune. In other words, the tax revolt was not limited to conservatives in the Sunbelt - tax relief had become a national issue.
In MA, the Citizens for Limited Taxations (CLT) focused on gaining the support of ordinary taxpayers, stating that the pensions of public employees were far too generous and burdensome. The CLT also argued that most state services weren’t necessary, such as state funded swimming pools for high schools. The major factor for the passage of Prop 2.5 was MA’s growing technology industry, which heavily funded the campaign for Prop 2.5. MA voters approved Prop 2.5 in November 1980. Prop 2.5 capped property taxes at 2.5% of the fair cash value of the home at the local tax base, and it also limited tax increases to 2.5% a year, with no exceptions for inflation or population growth. If CA ignited the tax revolt, MA legitimized it, in that if liberal MA passed such an initiative, then no state was immune. In other words, the tax revolt was not limited to conservatives in the Sunbelt - tax relief had become a national issue.
Washington, D.C. clearly heard the drumbeats of the tax revolt. Senator Bob Dole (R; KS) introduced a series of federal tax cut measures, including a proposed amendment that required a balanced federal budget. Beyond the huge boost the tax revolt gave the rising conservative movement in the US, the prophecies of doom when state/local funding decreased did not occur. A closer look shows that services were not affected very much due to states using their surpluses to cushion the blow. Also, most state cutbacks in spending were mostly on the politically unprotected areas such as facilities for the disabled and mental health.
In the longer run, states faced severe difficulties due to the tax revolt. For example, cities in MA such as Boston were forced to make steep cuts in police/fire protection. Boston suburbs imposed fees for trash collection, and MA public schools were especially hard hit, due to their reliance on property taxes, dropping curricular and extracurricular programs. Elsewhere in MA, Cambridge cut loose 25% of its teachers, and in Quincy it was 33%. However MA and the other states never looked back, enjoying the reduction in property taxes while at the same time getting used to fewer funded services. Spending limits, lower taxes, and beyond-frightened politicians meant that there was no more need for a continued tax revolt. During the 1980s and beyond, consumers, taxpayers, and elected officials turned to the private sector, not state/local government, for services.
In the longer run, states faced severe difficulties due to the tax revolt. For example, cities in MA such as Boston were forced to make steep cuts in police/fire protection. Boston suburbs imposed fees for trash collection, and MA public schools were especially hard hit, due to their reliance on property taxes, dropping curricular and extracurricular programs. Elsewhere in MA, Cambridge cut loose 25% of its teachers, and in Quincy it was 33%. However MA and the other states never looked back, enjoying the reduction in property taxes while at the same time getting used to fewer funded services. Spending limits, lower taxes, and beyond-frightened politicians meant that there was no more need for a continued tax revolt. During the 1980s and beyond, consumers, taxpayers, and elected officials turned to the private sector, not state/local government, for services.
It was not preordained that the tax revolt fueled the rise of conservatism, but that is what occurred, in that a majority of Americans bought into the conservative political myth that lower taxes always generated economic prosperity (“Reaganomics”). Americans wanted out of the “Malaise Days", and the New Right proposed the only palatable remedy. The real issue at hand wasn’t money, but control and attitude. Most Americans had enough of the attitude towards them of federal, state, and local politicians.
The anti-tax revolt fused together the various conservative factions for the first time, while also providing an “acceptable” outlet for racism; conservatives didn’t hold back in the least in tapping into the fears/resentments of white voters. Raging against the liberal welfare state was conservative code for “acceptable” racism. Conservatives kept stating that OUR tax money was being spent on THEM. Reagan was able to whip these factions into a winning and long-lasting conservative coalition. During the Presidential Campaign of 1980, Reagan claimed that supply-side economics (“Reaganomics”) was the way to go in order to end “Stagflation”, in that steep tax cuts would excite the economy to the point where it would be a “rising tide lifting all ships”. Reagan also argued that by doing so he would then be able to balance the federal budget during his second year as President, and by the end of his first term there would be a federal surplus.
The anti-tax revolt fused together the various conservative factions for the first time, while also providing an “acceptable” outlet for racism; conservatives didn’t hold back in the least in tapping into the fears/resentments of white voters. Raging against the liberal welfare state was conservative code for “acceptable” racism. Conservatives kept stating that OUR tax money was being spent on THEM. Reagan was able to whip these factions into a winning and long-lasting conservative coalition. During the Presidential Campaign of 1980, Reagan claimed that supply-side economics (“Reaganomics”) was the way to go in order to end “Stagflation”, in that steep tax cuts would excite the economy to the point where it would be a “rising tide lifting all ships”. Reagan also argued that by doing so he would then be able to balance the federal budget during his second year as President, and by the end of his first term there would be a federal surplus.
After satisfying the fiscal conservatives, Reagan reached out to the religious conservatives. Reagan openly appealed for their vote, and aligned himself with Falwell and the Moral Majority. In Dallas, Reagan spoke during an evangelical convention, saying that he knew they could not endorse him, but that he endorsed them. Reagan also tapped into the neoconservative braintrust, going outside the official structure of the Republican Party. By doing so, Reagan increased his campaign funding while also having access to conservative intellectual firepower. Reagan used the intellectual neoconservatives, the New Right, and direct mailing to great political effect.
In an essay in 1967, a Harvard professor wrote that CA Governor Reagan should not be dismissed or underestimated, arguing that Reagan’s conservatism would be a major factor in the US in one guise or another for a very long time. That same Harvard professor also wrote that “Reaganism” would not be a mainstream political force that would direct the future of the nation, arguing that CA was not the bellwether of the nation. There was no way that author, in 1967, could have predicted that Reagan’s politics, combined with his acting abilities and genuine optimism, would bury the casket of liberal reform.
In an essay in 1967, a Harvard professor wrote that CA Governor Reagan should not be dismissed or underestimated, arguing that Reagan’s conservatism would be a major factor in the US in one guise or another for a very long time. That same Harvard professor also wrote that “Reaganism” would not be a mainstream political force that would direct the future of the nation, arguing that CA was not the bellwether of the nation. There was no way that author, in 1967, could have predicted that Reagan’s politics, combined with his acting abilities and genuine optimism, would bury the casket of liberal reform.
