Reconstruction Era - Taxation During Reconstruction

Taxation During Reconstruction

Reconstruction changed the tax structure of the South. In the U.S. from the earliest days until today, a major source of state revenue was the property tax. In the South, wealthy landowners were allowed to self-assess the value of their own land. These fraudulent assessments were almost valueless, and pre-war property tax collections were lacking due to property value misrepresentation. State revenues came from fees and from sales taxes on slave auctions. Some states assessed property owners by a combination of land value and a capitation tax, a tax on each worker employed. This tax was often assessed in a way to discourage a free labor market, where a slave was assessed at 75 cents, while a free white was assessed at a dollar or more, and a free African American at $3 or more. Some revenue also came from poll taxes. These taxes were more than poor people could pay, with the designed and inevitable consequence that they did not vote.

During Reconstruction, new spending on schools and infrastructure, combined with fraudulent spending and a collapse in state credit because of huge deficits, forced the states to dramatically increase property tax rates. In places, the rate went up to ten times higher—despite the poverty of the region. The infrastructure of much of the South—roads, bridges, and railroads—scarce and deficient even before the war—had been destroyed during the war. In addition, there were other new expenditures, because pre-war southern states did not educate their citizens or build and maintain much infrastructure. In part, the new tax system was designed to force owners of large estates with huge tracts of uncultivated land either to sell or to have it confiscated for failure to pay taxes. The taxes would serve as a market-based system for redistributing the land to the landless freedmen and white poor.

Here is a table of property tax rates for South Carolina and Mississippi. Note that many local town and county assessments effectively doubled the tax rates reported in the table. These taxes were still levied upon the landowners' own sworn testimony as to the value of their land, which remained the dubious and exploitable system used by wealthy landholders in the South well into the 20th century.

Called upon to pay an actual tax on their property, angry plantation owners revolted. The conservatives shifted their focus away from race to taxes. Former Congressman John R. Lynch, a black Republican leader from Mississippi, concluded,

The argument made by the taxpayers, however, was plausible and it may be conceded that, upon the whole, they were about right; for no doubt it would have been much easier upon the taxpayers to have increased at that time the interest-bearing debt of the State than to have increased the tax rate. The latter course, however, had been adopted and could not then be changed.