America's foundation rests on an aversion to taxes. This is true, not just in its inception as a nation, but prior to it and throughout its existence. Admittedly, as a nation we have lost sight of this of late. Yet the old pattern still lies just beneath the surface and hopefully is about to reassert itself.
The central role that Americans’ resistance to taxes played in our independence from Britain is well known. However Alvin Rabushka, in his 2008 comprehensive study, Taxation in Colonial America, makes it clear our affinity for low taxes well pre-dates our independence.
Low taxes influenced colonists even before they arrived. As Rabushka notes, they were integral to early colonizing efforts. Only Pennsylvania did not offer multi-year exemptions from their home country's taxes.
Even after initial settling, taxes remained low. The colonies used a variety of means to satisfy their citizens' demand for low taxes. Land banks, bills of credit, and even lotteries, all were used to avoid or mitigate taxes.
When taxes were needed, it was almost always for the colony's defense. Even those, Americans only begrudgingly paid – even to their own colonial government. "That the overwhelming majority of the colonists resented paying even low taxes is evident from reports and laws dealing with noncompliance, arrears, and even the occasional violent rebellion."
Such resentment ensured taxes stayed low. Only during three brief periods in the last century of their history did the colonies endured relatively heavy taxation.
Americans paid little tax, because they had little debt. They had little debt, because they had little government and saw no need for more. Thus while Britain was crushed under mounting debt from European wars – the last of which removed France from North America, and with it the colonies’ greatest security threat – America was virtually debt-free.
America’s taxes and debt therefore were a fraction of those borne by residents of Britain. Rabushka estimates the colonies' debt as just one two-hundredth of Britain's, and their tax burden just one-tenth Britain's. What debt America did have, it raised taxes to retire. Once retired, taxes dropped – as Americans saw no further need for them.
Britain's mounting debt and tax burden sparked the revolution. Faced with high debts to service and retire, Britain sought to raise revenue from its colonies. The attempt was an abject failure, as many a frustrated colonial government tax collector could have predicted.