What taxes caused the American Revolution?

Sugar Act. Parliament, desiring revenue from its North American colonies, passed the first law specifically aimed at raising colonial money for the Crown. The act increased duties on non-British goods shipped to the colonies.
Currency Act. This act prohibited American colonies from issuing their own currency, angering many American colonists.
Beginnings of Colonial Opposition. American colonists responded to the Sugar Act and the Currency Act with protest. In Massachusetts, participants in a town meeting cried out against taxation without proper representation in Parliament, and suggested some form of united protest throughout the colonies. By the end of the year, many colonies were practicing nonimportation, a refusal to use imported English goods.
Quartering Act. The British further angered American colonists with the Quartering Act, which required the colonies to provide barracks and supplies to British troops.
Stamp Act. Parliament's first direct tax on the American colonies, this act, like those passed in 1764, was enacted to raise money for Britain. It taxed newspapers, almanacs, pamphlets, broadsides, legal documents, dice, and playing cards. Issued by Britain, the stamps were affixed to documents or packages to show that the tax had been paid.
Organized Colonial Protest. American colonists responded to Parliament's acts with organized protest. Throughout the colonies, a network of secret organizations known as the Sons of Liberty was created, aimed at intimidating the stamp agents who collected Parliament's taxes. Before the Stamp Act could even take effect, all the appointed stamp agents in the colonies had resigned. The Massachusetts Assembly suggested a meeting of all the colonies to work for the repeal of the Stamp Act. All but four colonies were represented. The Stamp Act Congress passed a "Declaration of Rights and Grievances," which claimed that American colonists were equal to all other British citizens, protested taxation without representation, and stated that, without colonial representation in Parliament, Parliament could not tax colonists. In addition, the colonists increased their nonimportation efforts.

Each month, the NBER Digest summarizes several recent NBER working papers. These papers have not been peer-reviewed, but are circulated by their authors for comment and discussion. With the NBER’s blessing, Making Sen$e is pleased to feature these summaries regularly on our page.

The following summary was written by the NBER and doesn’t necessarily reflect the views of Making Sen$e.

“No taxation without representation” — the rallying cry of the American Revolution — gives the impression that taxation was the principal irritant between Britain and its American colonies. But, in fact, taxes in the colonies were much lower than taxes in Britain. The central grievance of the colonists was their lack of a voice in the government that ruled them.

If a little representation in Parliament could have prevented a war for independence, why did King George III not grant it?

The political underpinnings of the American Revolution have been discussed and debated for more than 200 years, and there are multiple explanations of the causes and multiple analyses of the revolutionary dynamic. One question about the revolution that has remained difficult to answer is if a little representation in Parliament could have prevented a war for independence, why did King George III not grant it?

This question is the motivation for Sebastian Galiani and Gustavo Torrens‘s study “Why Not Taxation and Representation? A Note on the American Revolution.” In drawing attention to the role of representation as a spark for revolution, they note that the average British citizen who resided in Britain paid 26 shillings per year in taxes compared to only 1 shilling per year in New England, even though the living standard of the colonists was arguably higher than that of the British.

Most accounts of the events that led to the American Revolution depict a conflict between the colonies and a unified British government. In fact, the researchers argue, the reality was subtler. They draw on a variety of historical accounts to describe the tension between two rival British interest groups, the landed gentry and the democratically inclined opposition, and explain the failure to reach a compromise that would have granted representation to the colonies. In particular, they focus on how extending representation would have affected the relative influence of these two groups.

The researchers consider events a century before the American Revolution to have set the stage for the domestic tensions in Britain at the time of the colonial protests. In 1649, during the English Civil War, a rebellion of Parliamentarians overthrew — and beheaded — King Charles I. Oliver Cromwell, who ruled for most of the subsequent decade, supported expanding representation in government beyond landowners, and his government was sympathetic to grievances like those raised by the American colonies many decades later. However, following Cromwell’s death in 1658, Royalists returned to power and sought to restore the historical ruling class.

The average British citizen who resided in Britain paid 26 shillings per year in taxes compared to only 1 shilling per year in New England.

When the colonies asked for representation in the middle of the 18th century, the monarchy was still recovering from its dethroning, and the landed gentry, now returned to primary power, still felt vulnerable. The researchers point out that the Royalists were contending with factions that sought to bring democracy to Britain. While these opposition groups did not hold significant power, if representatives from the American colonies were invited to join Parliament, they likely would have sympathized with the opposition and expanded their influence. The researchers see this tension as critical to understanding why Britain was so reluctant to enfranchise the colonists.

There were proposals to settle the colonial crisis peacefully, most notably by Thomas Pownall and Adam Smith. Smith, for example, proposed “a system in which the political representation of Great Britain and America would be proportional to the contribution that each polity was making to the public treasury of the empire.” Such proposals were rejected by the ruling coalition in Britain. “The landed gentry, who controlled the incumbent government, feared that making concessions to the American colonies would intensify the pressure for democratic reforms, thus jeopardizing their economic and political position,” the researchers find.

Ultimately, the opposition of the landed gentry to the demands for representation by the American colonies pushed the colonies to rebellion and independence, but helped to delay the development of the incipient democratic movement in Britain.

— Jen Deaderick, National Bureau of Economic Research

"The Death of General Mercer at the Battle of Princeton," licensed for use on the public domain by Wikimedia Commons.

Justin du Rivage—

Alexander Hamilton was barely out of his teens when he mounted his swashbuckling defense of the Continental Congress in 1774. If colonists failed to stand up to Parliament, he told his fellow New Yorkers, before long their “tables, and chairs, and planters, and dishes, and knives and forks, and everything else would be taxed.” Britain would soon tax colonists “for every child you got, and for every kiss your daughter received from their sweet-hearts, and God knows, that would soon ruin you.”

Hamilton was as enthusiastic about women as he was about politics, and it’s easy to imagine the distress a hypothetical tax on kisses might have caused the young radical. But his fears were based on more than just opposition to taxation without representation. They stemmed from his belief that an unaccountable legislature would tax the colonies into oblivion. To Hamilton and his fellow American revolutionaries, the problem wasn’t big government but narrowly self-interested government. Parliament’s taxes promised to transform a prospering political community based on reciprocity and exchange into an empire of domination and extraction.

Taxes could provoke such fears because they were—as they still are—both the lifeblood of the state and an instrument of power in their own right. They paid for armies and infrastructure, bureaucracies and public debt. They also shaped the economy, influencing the goods people made and bought. In so doing, taxation could either promote equality or entrench dominance. With so much at stake, taxes like the Stamp Act and Townshend Duties provoked a fierce debate over the legitimacy of Britain’s imperial rule.

America in the 1770s was increasingly an unequal and anxious society. Yet it was not a bad economy that caused the American revolution. Rather, colonists revolted against an empire whose leaders made no secret of their commitment to taxes and trade regulations that promised to enrich a small elite while harming colonists’ well-being. Such policies would reduce their economy to the same impoverished condition as Ireland and India.

Supporters of colonial taxation on both sides of the Atlantic disagreed. And although they were fiercely committed to authoritarian imperial reforms that would eventually split the British Empire, they were neither villainous nor stupid. They were, however, committed to a distinct vision of politics. Champions of austerity, hierarchy, and order, they sought to remodel government both at home and in the colonies. Advocates of imperial taxation had personally faced the violence of crowds and the insubordination of colonists, and they had an understandable fear that the economic and social changes transforming their empire would make both freedom and government impossible. They grew increasingly concerned as they watched their country’s debts spiral upward while politicians appealed to the mob. Britain had a choice, they concluded: cut spending and raise taxes on the colonies or face collapse.

While these views led many British conservatives to push for new colonial taxes and stronger imperial governments, it would be a mistake to see austerity and colonial taxation as quintessentially English. Many eighteenth-century French and Spanish leaders shared these views, and British supporters of colonial taxation only really succeeded in grabbing the reins of government in the 1770s. Indeed, many of Parliament’s sharpest critics were themselves giants of British political life. William Pitt, Richard Price, and countless other statesmen, intellectuals, and activists insisted that British interests and rights were the same in Boston as they were Birmingham. Committed to a more equal empire, they marshalled their political and intellectual energies in dozens of speeches and pamphlets. They argued that colonial taxation meant not only fewer customers for Britain’s factories but tyranny for its subjects. When the war finally came, their sympathies were often with the rebellious American colonists rather than with their own government.

British enthusiasm for American rebellion demonstrates that the revolution was as much a clash of ideas as it was a clash between two countries. Those ideas had enormous consequences. They not only shaped the contours American government; they enshrined its commitment to the “general welfare.”

The legitimacy of the British Empire in America depended on its promise of freedom and prosperity, on being “an empire of liberty.” American independence was ultimately a response to an emerging political economic system that seemed to many colonists increasingly exploitative and cruel. Despite his objection to Parliament’s taxes, Hamilton was no enemy of government. He and his fellow revolutionaries only declared their independence after they reluctantly concluded that Britain’s empire of liberty no longer deserved its name.

In its place, America’s revolutionaries created a new, republican empire that offered a brighter future for its citizens. While tainted by bigotry and slavery, America’s new governments promoted immigration and infrastructure, wealth and knowledge. In our own age of inequality and alienation, that vision of politics offers a roadmap for the future. But it also issues a stark warning. Governments that ignore the relationship between liberty and shared prosperity do so at their peril.

Justin du Rivage received his Ph.D. from Yale and previously taught early American history at Stanford. He lives in London.