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Carrie Manning’s illuminating book examines how policies to limit taxation at state and local levels in the U.S. have direct and lasting consequences for equity, accountability, and ultimately for democracy.
Tax structures embed, and reproduce, an implicit social contract between government and citizens, creating path-dependent outcomes that produce unintended consequences that are rarely traced back to state and local revenue models. This book combines historical American political development with the study of state formation. It provides a clear-eyed investigation into the past, present, and future of the social contract between America’s local governments and citizens.
This chapter focuses on one of the most pernicious effects of the artificial creation of fiscal scarcity through tax and expenditure limitations (TELs) – the use of law enforcement as revenue generation. The use of policing to generate government revenue, first through civil asset forfeiture and then through traffic fines, court fees and other criminal justice fines and fees, as well as municipal ordinance infractions, has reinforced this low-tax, small government tax bargain. And, though the modalities of its implementation have been updated over time, this narrow tax bargain continues to be premised on the exclusion of racially and economically marginalized communities. Non-tax revenues raised through traffic citations and fines for minor infractions tend to fall disproportionately on people of color. In effect, these measures allow politicians and taxpayers to keep taxes low while singling out a marginalized class of people to help pay for essential services that are normally considered public goods.
Chapter 6 pulls together the threads of the argument developed over the course of the first five chapters. Contemporary policies are not linked solely to new fiscal exigencies or present-day partisan politics. Rather, they reflect the broad outlines of a social contract whose basic parameters have endured since the time of state formation. And these parameters endure because tax policy embeds and carries forward notions about who is a citizen, what citizens owe and can expect from the state, and what states can properly demand of citizens.
The last half-century in the United States has been marked by two highly consequential and starkly contrasting social movements: the civil rights movement and the conservative tax revolt. Together, they help illustrate the two principal claims of this book. First, tax bargains set at the time of state consolidation tend to become ‘taken for granted’ arrangements that inscribe the scope and roles of the state and the boundaries of the political community entitled to protection and services from the state. The tax bargain entrenches the political and economic power of dominant actors at the time the bargain is set, and those advantages gain momentum and widen the gap between them and others not privileged by the tax bargain and the social contract it supported. Second, when those understandings are challenged at ‘critical junctures’ by social or political mobilization that seeks to expand the role of the state and the political community, the tax bargain serves as a rally point and a concrete policy tool to support an agenda of resistance to change. This chapter describes the conservative tax revolt, and specifically the tax and expenditure limitations it championed, as a tool of resistance to an expanded social contract.
Chapter 3 shows how in the US, as citizenship was extended through constitutional and legal means to people who were not citizens at the time of state formation and the forging of its associated tax bargain, resistance to the inclusion of new groups in the body politic takes the form of resistance to changes in the tax bargain. Today’s tax policies in much of the American South are informed by the process of state consolidation that followed the Civil War (1860–65) and by resistance from states to that process. Ideas about the state, citizenship, and intergovernmental relations that grew out of the antebellum, Civil War, and Reconstruction periods in the South have been carried forward to the present day. These ideas have proved resilient in the face of initiatives – the New Deal, the War on Poverty – that held a more expansive (or intrusive) view of role of government, as well as a more robust social contract. The tax bargain, and the tax policies it encompasses, play an important role in maintaining a restrictive social contract.
This chapter examines the notion that tax bargains underlie the formation of states, finding support in the comparative politics literature on state formation. Tax policy is not just the result of the interplay of a set of actors at a given point in time. Rather, who these actors are, what resources, beliefs, and values they bring to the table, and how they interact with one another is the result of earlier policies. The social contract at the time of state formation is the starting point, and the mechanism for reinforcing this social contract is the tax bargain. The tax bargain then constrains the kinds of tax policies that are possible. The chapter draws on theories and concepts from public economics, comparative politics, political theory, and fiscal sociology to show a surprisingly broad shared understanding in these different scholarly traditions about how taxation is tied to state formation and governance across regime types and throughout history. Finally, it sets out the processes and mechanisms through which a historical social contract can be reproduced and carried forward over time through the tax bargain.
This chapter introduces the main questions to be addressed, justifies and situates the topic, and discusses the scope, content, and aims of the work. It opens with a description of events in Ferguson, Missouri in 2014, when an unarmed teenager was killed by a police officer, sparking large-scale protests and drawing attention to practices of revenue-driven policing. It offers Ferguson as one example of many local jurisdictions in which local governments’ efforts to find new sources of funding in the face of resource scarcity (often created by tax and expenditure limiting measures) have produced troubling and sometimes perverse consequences. These include a shift toward the use of municipal court fees and fines to fund public safety, resulting in predatory policing. The chapter argues that these practices are not just the result of contemporary fiscal need but reflect a long-standing social contract, and its attendant tax bargain, on which states were built. It introduces the concepts of state formation, the social contract, and the tax bargain that frame the argument of the book, and describes the plan of the book.
