The Price of Democracy: How Battles Over Taxes Define Who Belongs in ‘We the People’

Every schoolkid learns that the 1773 Boston Tea Party involved colonists dressing as native Americans, sneaking onto merchant ships, and tossing crates of tea into Boston Harbor to protest taxation without representation in British Parliament.

 Right? Well, not exactly.

The American Political Economy eXchange (APEX) at the Institution for Social and Policy Studies invited Vanessa Williamson earlier this month to discuss her new book, The Price of Democracy: The Revolutionary Power of Taxation in American History.

Speaking in a crowded classroom, Williamson discussed the Boston Tea Party not as a protest against taxes in the abstract but against the specific provisions of the Tea Act that created a special tax break for the East India Company, a move pre-Revolution colonists saw as building a monopoly tied to political power.

“They were angry about a tax cut,” Williamson said. “The Boston Tea Party, this touchtone of anti-tax history, is in fact a story of opposition to corporate tax cuts — to a corporate bailout.”

In her book, Williamson, a senior fellow in Governance Studies at Brookings and a senior fellow at the Urban-Brookings Tax Policy Center, emphasizes that Americans do not naturally hold extreme anti-tax views.

“People largely see taxation as a civic duty,” she said. “Being a taxpayer is an indication of citizenship. Taxation becomes controversial only when who counts as a citizen becomes controversial.”

She argues that moralized anti-tax ideology has emerged in periods when American elites have challenged the expansion of democracy, fighting over who belongs among the Constitution’s “We the People.” In her telling, the wider public has pushed for broad taxation to build equality, while wealthy interests have curtailed taxing power to protect their dominance.

“She’s written a compelling, original, propulsive book that takes us back in time to really understand the roots of anti-tax sentiment and the fight over taxes,” said Jacob Hacker, director of APEX and Stanley Resor Professor of Political Science at Yale. “Which is really a fight about the nature and scope of democracy.”

APEX is part of the Consortium on American Political Economy (CAPE). Founded in 2023 with the support of the Hewlett Foundation, APEX studies American democratic capitalism — the analysis of the interplay of markets and government in the United States.

Williamson’s historical overview of anti-tax sentiment in the United States touched on slaveholders’ fear of democracy, including how founding father Patrick Henry opposed the Constitution for giving the federal government too much taxing power and even possibly achieving abolition through taxation.

“Literally every tax limitation in our federal constitution today was a result of the compromises made with slave owners,” Williamson said.

After the Civil War, multiracial Reconstruction governments needed tax revenue for schools and rebuilding, Williamson said. After Reconstruction governments were overthrown, white supremacist Redeemer regimes rewrote tax rules to prevent future majorities (including Black voters and poor whites) from using taxation to build public goods. They put in place supermajority requirements to raise but not lower taxes; shifted from taxing property to fees and fines; and debilitated the institutions that raised taxes.

“A supermajority requirement means that even if wealthy oligarchical elites lose an election, they don’t really lose,” she said. “Because they can still prevent tax increases and well‑funded public schools.”

During the Gilded Age of the late 1800s, John D. Rockefeller, one of the richest Americans in history, led legal efforts to successfully overturn the 1894 federal income tax. His lawyers argued, “High graduated taxation realizes most completely the supreme nature of democracy.” More succinctly: High taxes enable majority rule, an outcome feared by the wealthy.

“Anti-tax movements are typically anti-democratic movements,” Williamson said. “They limit majority rule, and they undermine the tax capacity of the state.”

Williamson compared these historical attacks on taxation to recent cuts at the Internal Revenue Service, which lost 25% of its workforce last year.

“This loss undermines enforcement,” she said. “Especially against high earners.”

Williamson offered theories on why taxation and democracy reinforce each other, tracing the concept back to the Magna Carta of 1215, in part requiring that the king of England obtain “the general consent of the realm” before imposing extraordinary taxes.

“Taxation demands consent, consent requires representation, and representation enables more effective taxation,” she said. “When you develop a system of common consent to taxation, it is easier, not harder, to raise tax money.”

In addition, Williamson said welfare programs both require taxes and produce more engaged citizens.

“Social Security proved freeing for the elderly,” she said. “It made them more active citizens.”

But the battle rages on, Williamson said. Redeemer-era supermajority requirements to raise taxes still constrain many states today. And anti-democratic, anti-tax actors seek to starve government institutions of human and fiscal resources.

“If you’re going to have a democratic state, you need to have a state,” she said. “If we save our electoral institutions but fail to rebuild the fiscal state and restore tax capacity, we cannot maintain a functioning democracy.”