Paying for Progressivism

Thomas R. Pegram
Loyola College in Maryland

Americans hate taxes yet they demand services from government. This popular contradiction has its analogue in the reluctance of American historians to examine tax policy in the late nineteenth and early twentieth centuries despite widespread recognition of its significance in the construction of the modern activist state. Advancing a tradition of scholarship from Martin Schiesl to Jonathan Kahn that emphasized the importance of fiscal instruments in American state-building,1 R. Rudy Higgens-Evenson finally makes tax policy central to the growth of state governments between 1877 and 1929. In just over one hundred pages, The Price of Progress argues that during this critical period, state governments enacted new forms of corporate taxation to fund expanded public services, which promoted close government-business ties that, in turn, led to the adoption of business methodsÑand corporate influenceÑin state administration and budgeting. As Higgens-Evenson puts it, the price of government reforms and services "was the invention of the corporate state itself" (8).	1
Higgens-Evenson's identification of state and local government as the primary location of innovation and structural change in the late-nineteenth and  early twentieth centuries is a key strength of the book. He opens with an effective dissection of the deficiencies of the property tax, the dominant form of taxation in the mid-nineteenth century, and the search for alternatives in the 1870s. The property tax fell hardest on the owners of real estate and other tangible property, whereas stocks, bonds, and other intangible property escaped assessment. State governments not only were bombarded with complaints from farmers and other holders of real property, but the states were also deprived of revenue from most forms of corporate capital. For their part, businesses were also annoyed by inconsistencies in the property tax. Local assessors valued property as they saw fit, so that corporate property taxes were unsystematic and unpredictable. Some corporations endorsed centralized assessment and new state taxes as a rational alternative to the vagaries of local taxation.	2
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