New Taxes and the American States: The Social Origins of Fiscal Citizenship Debates, 1945-1970
Scholars have documented that a new type of fiscal compact took hold in the United States during the twentieth century as taxpayers supported progressive taxation on incomes in exchange for public investments by government aimed at securing widespread prosperity. Yet by focusing primarily on the national level, existing literature examining the link between tax structure and social policy in the United States has missed a key element of American fiscal exceptionalism. By moving to the state level, my analysis finds that very different fiscal bargains, or models of “fiscal citizenship,” developed across the American states between the late 1940s and early 1970s, in many cases dramatically departing from the national model. Indeed, in some states, taxes were understood not as a way to underwrite progressive investments but rather as a means to force groups “escaping” taxation to contribute more toward the cost of government, as a way of preserving an exclusionary social order, or as a tool for purchasing autonomy from federal intervention.
Understanding the factors shaping this period of reforms is critical for strengthening theories of the exceptional American welfare state, particularly since the United States is distinctive in its strong reliance on state-level revenue generation to support social policy expenditures. In this dissertation, I examine what factors were responsible for the development of such diverse fiscal compacts across the American states by undertaking a comparative historical analysis of four key cases of state tax reform: New York, Texas, Georgia, and South Carolina. I find that types of social contracts negotiated between taxpayers and the American states during these critical tax debates depended on the balance of power between labor and business groups and the prevailing racial order in each state.