Academic journal article Policy Review

The Colonial Roots of American Taxation, 1607-1700

Academic journal article Policy Review

The Colonial Roots of American Taxation, 1607-1700

Article excerpt

IT IS SAID THAT TAXES are the price we pay for a civilized society. In modern times, this has meant more and higher taxes, rarely fewer and lower taxes. The tax bite in the United States is one-third of the gross domestic product (GDP). In the Western European democracies, the tax take reaches up to 50 percent.

It was not always so. At the turn of the twentieth century, the tax bite in the United States was a low 10 percent of GDP. And even that level was high by the standards of the American colonies. The first few generations of immigrants who settled the American colonies paid only those taxes that were necessary to provide security against internal and external enemies, a system of courts and justice, prisons, roads, schools, public buildings, poor relief, and churches in some colonies. This consumed no more than a few percentage points of their income. Moreover, the early settlers sought to minimize, avoid, and evade those modest taxes to the maximum possible extent. Only in wartime were they amenable to higher taxes, after which taxes were rolled back to the previous low level. The early colonists did not flee Europe to pay high taxes in the New World.

Prelude to the American colonies

BEGINNING IN THE fifteenth century, dreams of gold, silver, spices, and other trading opportunities motivated European adventurers to explore and claim tracts of land in Africa, Asia, and the Americas for their sovereigns and hefty rewards for themselves. The Portuguese, Spanish, French, Dutch, Swedes, Danes, and English engaged in a great land rush. The Portuguese and Spanish divided up most of Latin America. The French seized portions of Canada and several Caribbean islands. The Swedes and Danes briefly occupied parts of Delaware and several Caribbean islands. Dutchmen briefly ruled New York and settled two groups of Caribbean islands. The English (British after union with Scotland in 1707) established colonies along the Atlantic Coast stretching from Newfoundland to South Carolina (founding Georgia in the eighteenth century) along with Bermuda and numerous Caribbean islands.

Most Americans know the story of the first colonial settlement in Jamestown, Virginia, in 1607, and that of the Mayflower Compact and the New Plymouth settlement in 1620. Apart from stories of personalities, religious disputes, immigration from Europe, and the beginnings of slavery, the public is less conversant with the subsequent development of the American colonies from the founding of Jamestown and New Plymouth until the opening salvo of the French and Indian Wars in 1754.

Although numerous economic accounts have been written about the early colonies, few are explicitly concerned with taxation. Most books and articles deal with daily economic life. Taxation became a central theme only from the end of the French and Indian Wars up to the Declaration of Independence. To this day, there is no single comprehensive volume on taxation during the colonial period. To understand "no taxation without representation" and Americans' skepticism of taxes requires a more comprehensive review of colonial taxation than the Stamp Acts and the Boston Tea Party.

This article is the first in a series examining the colonial roots of American taxation. This essay reviews the first century of colonial taxation in America. Others will survey 1700 through the French and Indian Wars and the years leading up to the Declaration of Independence, the Articles of Confederation, and, finally, the Constitution of the United States. Taken together, these essays will show the limited scope and low rates of taxation, the response of the colonists to taxation, and the purposes on which public funds were spent between 1607 and 1783, a period encompassing 176 years.

Founding and growth of the American colonies

THE FOUNDING AND growth of the original American colonies were a slow process. …

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