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Success Stories from Taxpayers Associations Around the World

Taxpayers associations are a remarkable phenomenon. They are supported by many individuals. Together can they influence politics and effect a change. Provided below are a few of their success stories from around the world.

The post-war tax revolt started in California during the 1970s, with very high rates of increase in property taxes. The revolt spread over the United States and around the world. It helped Margaret Thatcher to cut the highest income tax in Britain down from 60 to 40 percent. It made changes in many countries.

The revolt also reached the highest-taxed country in the world, Sweden, in 1985. The Swedish Taxpayers Association launched a huge campaign to reduce the top income tax rate from 84 percent to 50 percent through the "Half Left-campaign," illustrated with a half crown. The Swedish tax revolt was supported by hundreds of thousands of individuals and resulted in a new legislation in 1991 with a maximum income tax of 50 percent -- Half Left! Read more about the campaign below.

Lower Taxes Come to Sweden

Just six months after they cast their votes in the elections, taxpayers received two rounds of good news when the Swedish government announced that two of the least popular taxes -- the real estate and capital taxes -- were to be abolished. For many years, Sweden has had the highest tax burden in the world -- 50% -- which is 10% higher than the OECD average. The typical taxpayer remits 3 kronor in taxes for every 5 kronor earned. Many pay a lot more. The political parties in Sweden have historically had very different opinions about individual taxes, but have otherwise been in agreement about the high tax politics that have characterized the post-war period. So what made the new government decide to abolish these taxes?

For several years, the Swedish Taxpayers Association has been leading a long-term project to reduce Swedish taxes. One problem encountered was that Swedish taxes -- albeit high and numerous -- have been hidden from most citizens. A significant exception, however, is the real estate tax, a tax paid by property owners. This, in combination with regulations forcing many to pay a tax that in some cases exceeds their income, has meant widespread discontent. We have now made the real estate tax a relevant subject in the debate over taxes. The Swedish Taxpayers Association has been organizing annual demonstrations against the tax, to which the political parties are always invited. At the same time, the media have been provided with ample news materials, important statistics, and informed commentaries. Prior to the 2006 elections, these debates led to the non-Socialist parties being forced to agree on a proposal to abolish this tax. After the elections -- which were won by the non-Socialist parties -- the Swedish Taxpayers Association has reminded voters and the elected parties about their vow. In order to avoid controversy surrounding inevitable accusations of fraud, the government has been forced to honor this vow.

The capital tax has, as a result of the comprehensive flight of capital, led to a reduction in investments, and as a consequence, a reduction in employment. The tax has, however, been difficult to abolish, as it has been seen by many (quite wrongly) as a way of leveling out social differences. By pointing out the damages caused by the tax and the resulting muddled and unfair regulations, the Swedish Taxpayers Association has managed to apply pressure, primarily in the business press, to have the tax abolished. In this debate, even the Swedish National Tax Board has agreed with this criticism.

In sum, our efforts have resulted in the government's decision to abolish the tax early in the mandate period, in order to avoid a heated discussion about income distribution effects closer to the 2010 elections. Once again, we have shown that when properly organized and united, taxpayers can make major gains toward the economic freedom they deserve.

By Robert Gidehag
CEO
Swedish Taxpayers Association
May 2007

California 1978: The Citizens Awaken -- Proposition 13 Brings Sky-High Property Taxes to Earth

Many recognize the State of California as the birthplace of the modern Tax Revolt in the United States, with the adoption of Proposition 13 in 1978. The measure cut property taxes from 2.5 percent of market value of a residence and capped the actual rate at just 1 percent. Additionally, it required a 2/3 "supermajority" of the State Legislature to increase other state taxes.

While some explain Proposition 13's success as a natural public reaction to rising property values (and therefore taxes), failure of elected representatives to address the problem had a more important role. As far back as 1968, the political establishment sought to derail or delay significant tax relief. That year, the Legislature placed a measure of its own on the ballot to compete with Proposition 9, a citizen-initiated "direct democracy" proposal that would have functioned much like the property tax lid in Proposition 13. The Legislature's proposal was modest in comparison, offering a per-home exemption of $750 of assessed value from property taxes. Proposition 9 was defeated, and the Legislature's alternative was adopted.

But just five years later, property taxes were rising again. Local governments boasted to residents about lower property tax rates, yet failed to acknowledge that the assessments to which the rates applied had doubled or tripled. By 1977, the State Legislature got into the act, squandering a year's worth of debate over various tax relief proposals to no avail. All the while, California's budget surplus soared, rendering absurd all the claims from public officials that a property tax cut was "unaffordable."

It took lawmakers and Governor Jerry Brown until March of 1978 - three months after Proposition 13 had qualified for the ballot -- to place a weaker substitute, Proposition 8, on the election slate. But the hand-wringing did not end there. Proposition 13's opponents predicted the loss of 451,000 jobs and a 2.8 percent jump in unemployment if the measure passed. A Sacramento City Council Member warned, "most counties will face such drastic staff cutbacks that efficient administration of welfare programs at the local level will be impossible."

Sweden 1985-1991: The "Half-Left" Campaign Cuts the Top Personal Income Tax Rate from 84 to 50 Percent

Sweden is well-known for high taxes, in fact the highest in the world. The non-socialistic parties tried to reduce the high income taxes for many years without success. The Social Democratic party in power wanted no change whatsoever. They even opposed adjusting the tax brackets for changes in the rate of inflation.

In 1985, the Swedish Taxpayers Association (established already in 1921 by the well known banker Dr. Marcus Wallenberg) employed Bjorn Tarras-Wahlberg as the Association's President. Tarras-Wahlberg had extensive political and business connections from his 10 years as chief lobbyist for the wealthy and powerful Swedish Employers Confederation.

Tarras-Wahlberg quickly built public interest in and gathered money for a huge attack on the confiscatory tax structure. The idea was to make this a moral issue, not an ordinary tax issue - you get at least half of your increase or extra pay and the state takes the other half. Or as they wrote on busses and ads all over the country: "Half Left - A Human Right," always illustrated by a half coin on a red background.

The first step was to make a market survey to find out the general opinion on such a radical change. A great majority -- 75 percent of Swedes -- supported the tax cut, however most politicians and media people were negative. At a private meeting half a year before the big campaign began, the liberal party said that the tax cut was politically totally impossible.

The red colored campaign started in February 1985 a few weeks prior to the yearly tax declaration and at the same year as a general election took place. Tarras-Wahlberg and his fellow taxpayer advocates wanted to use those two events to build momentum for the "Half Left" campaign -- and they did!

The general public noticed the multi-million campaign just about everywhere. Every household in the country received a full colour brochure - "Time to React" -- that intentionally looked like the brochure that was distributed by the tax administration - ("Time to Declare").

And the liberal party leader printed a big poster for the election with his picture and a text that explained that everyone should at least get Half Left.

Tarras-Wahlberg made a tour to meet with media and members in 20 cities from far north to the very south of the country. At each place, he explained to the media how the public in the region reacted to the campaign as well as the viewpoint of each of the political parties. Even a majority of the communists supported the reform, Tarras-Wahlberg explained.

As a result of the campaign, the membership of the Swedish Taxpayers Association increased by 100 every day during a number of years and finally reached nearly 200,000 paying members per year. In a country of 8 million people, this meant that the Association's membership represented 5 percent of the whole population and as much as every fourth household in some residential areas.

All members received special information, including a preprinted Half Left-postcard that was to be sent to one of the party leaders (Mr.Olof Palme received 10,000 signed postcards advising him to reduce income taxes in order to boost the economy and reduce the level of unemployment). All Association members received a pin with the half coin, which you could see on jackets everywhere. Lifetime members received a golden version of the pin. The red decal with the two words "Half Left" and the image of half of a coin on it could be seen on cars all over the country was most effective.

Tarras-Wahlberg and his staff kept the issue alive for the following years and arranged a huge outdoor advertising campaign some weeks before the general election in 1988. That same year the ruling Social Democratic party appointed a special committee to investigate limiting the highest income tax rate to 50 percent, with a rate of 30 percent for most taxpayers.

Then in 1991, the Half Left reform was introduced, much to the surprise of all socialist voters who could not understand the advantages of low income tax rates when they had been taught that income taxes should be high to disadvantage the rich and to assist the poor. Many of these voters did not support their party at the election the same year and a new liberal conservative government was installed at the end of 1991.

By Bjorn Tarras-Wahlberg
Founder and Secretary General of the World Taxpayers Associations
Former President of the Swedish Taxpayers Association (1985-2000)
www.worldtaxpayers.org

Colorado: Taxpayers Win Their "Bill of Rights"

This state's experience clearly illustrates the difference in opinion between lawmakers and citizens over what constitutes a stringent Tax and Expenditure Limitation. In 1977, the State Legislature adopted a statutory limit, then regarded as innovative, on general fund appropriations. Intended to allay citizens' concerns over budget growth during a time of economic expansion, the law restricted state appropriations increases to 7 percent, relative to Colorado's general fund appropriations in the prior year.

But much to the dismay of taxpayers -- and the indifference of most public officials -- state and local government expanded, during Colorado's economic booms and busts. From 1979-90, property tax revenue increased 151 percent, 2-1/2 times faster than inflation. From 1981-1990, income tax revenues outpaced the growth in personal incomes by a similar margin. Meanwhile, state and local debt was skyrocketing, up 180 percent during 1980-87.

Amidst this concern, activists attempted on three separate occasions to qualify and pass an initiative known as the Taxpayer's Bill of Rights (TABOR). While successive versions of TABOR contained refinements, the measure basically stipulated that voter approval would be required for any state or local expenditures of revenue above and beyond inflation and population growth. Although the initiative's proponents failed to win at the polls in 1986, 1988, and 1990, their margin of defeat became smaller.

Faced with the possibility that TABOR proponents might succeed by the next election, in 1991 the Legislature passed a new statutory expenditure limit. As in California, the Colorado political establishment's solution was comparatively tame. The law limited annual increases in state general fund appropriations to 6 percent of the previous year's level or 5 percent of total state personal income for the two previous years, whichever is less. Undaunted, activists pressed on with the TABOR measure, which had qualified for the November 1992 ballot as Amendment 1.

Public officials, from the Governor to County Sheriffs, wildly predicted that fiscal and economic calamity would descend upon the state if Amendment 1 passed. One investment banker went so far as to predict that the measure could increase chances for the Pope's assassination during a planned visit to the city of Denver. But the voters ignored the rhetoric and adopted the tax limit. And to date, according to State Treasurer (now Governor) Bill Owens (R), not a single one of the far-fetched doom scenarios has come true:

"[T]he Pope came and went - successfully and without any threat to his person. Crime has dropped, our economy is booming, while the credit ratings for most public debt have actually improved. ...Colorado's economy has improved more in the past four years than at any time since World War II; tax revenues have surged as the leveling off of taxes has led to new business investment; job growth has surpassed the national average every year since 1992 and unemployment has fallen to 2 percent below that of the rest of the country."

Opponents of Amendment 1 have likewise come to appreciate its unique impact on the fiscal policy process. In 1993, Governor Roy Romer (D) admitted that passage to him meant "two things: 'We want you to run a leaner government' and 'we want to participate'. With a message like that, clearly we need some outreach that, hopefully, will close the gap between citizens and the government." Romer's Director of State Planning and Budgeting agreed, and observed "...Amendment 1 came along, and it seemed like the right time to go out and retest our assumptions about the people's order of values."

It is difficult to imagine any legislatively-imposed limit inducing such reactions. The Independence Institute commissioned Fred Holden, author of the Total Power of One in America, to examine a decade's worth of data prior to passage of Amendment 1 and after its enactment. Holden determined that in every respect, the measure worked as advertised and delivered significant benefits to taxpayers and the economy. In the 10 years before the tax limit became law, Colorado revenues and outlays grew more than twice as fast as inflation and the state's population. During the decade following Amendment 1, actual taxes and spending fell into line with inflation and population, proving that politicians could not easily circumvent the new law's straightforward provisions. Meanwhile, the private sector benefited tremendously from a consistent limit on the expansion of the public sector. Before the new law, government jobs were being created at a faster rate than private jobs, but in the 10 years following enactment, business jobs outstripped government jobs at a rate of better than 2 to 1.

The rebate mechanism also proved a major boon to taxpayers. In five fiscal years alone (1997-2001), Amendment 1 triggered $3.5 billion in refunds -- worth $3,200 for a typical family of four. But this understates the effect, since the measure also tamed revenue and budget growth every year, whether or not rebates were generated. All told, the average family paid roughly $16,700 less in taxes during the first decade of Amendment 1.

For residents of other states that allow I&R, Amendment 1 has provided another boon: along with Oklahoma's Question 640, it has become a model for limiting government growth that has helped to touch off the next wave of the post-Proposition 13 tax revolt. Activists in Florida, Nevada, and Washington have successfully employed the concept of voter approval for higher taxes in their own ballot measures. In 2004 and 2005, Amendment 1-type measures have been proposed in more than 15 states, including Idaho, Kansas, Maryland, Minnesota, Virginia, and Wisconsin. However, in 2005, Amendment 1 was temporarily weakened by a proposal from the state's Governor (ironically, Bill Owens) and Legislature to suspend some of its restrictions. Yet at least, citizens had the opportunity to vote on this change, instead of having the change forced upon them by decree.

By Pete Sepp
Vice President for Communications
National Taxpayers Union/USA
www.ntu.org

Oklahoma: Sooner or Later, Tax Relief

Despite an average tax burden that was 14th-highest in the nation, in 1990 Oklahoma public officials decided they needed even higher taxes. The Legislature and Governor adopted an "education reform package" that also increased sales and income taxes by more than $400 million. Using direct democracy, citizens successfully petitioned for a referendum on the law, which was held in October of 1991. Pro-taxpayer forces encountered every obstacle in their campaign, including a 15 to 1 spending disadvantage and a bombing of the campaign's headquarters. Citizens voted against repeal of the tax hikes by a 54 to 46 percent margin.

But rather than walking away, activists used the petition process for a second proposal, this time one of their own drafting. State Question 640, as the measure became known, would subject all state tax increases to a 3/4 legislative "supermajority" vote or a majority vote of the people for approval. In March of 1992, faced with a similarly determined opposition, Question 640 supporters carried the day -- ironically by the same 54 to 46 percent margin that had earlier defeated them.

In states that only allow referenda, citizens are confined to merely reacting to what elected officials have done. But with the initiative, citizens can, in the words of Oklahoma activist Dan Brown, "take back the government we once owned."

Tennessee: Statewide Income Tax Defeated

The weekend before July 4, 2004, was a cause for celebration among supporters of Tennessee Tax Revolt (TTR, www.tntaxrevolt.org), who commemorated their truly revolutionary effort that won the state's continued independence from a broad-based income tax. TTR members organized the mass rallies and motorcade protests that exposed and ultimately thwarted the State Legislature's secretive maneuvers in 2001, 2002, and 2003 (helped by then-Governor Sundquist) to impose a tax on Tennesseans' wages.

The immensity of TTR's triumph in the history of the American tax revolt cannot be overstated. Not since Connecticut Governor Lowell Weicker and the Legislature imposed an income tax have so many thousands of taxpayers taken their anger directly to the institutions of government. And, unlike Connecticut, taxpayers in Tennessee won. Activists accomplished the defeat of a statewide income tax primarily through the use of mass-rally tactics and political radio talk shows that urged Tennessee citizens to pressure their lawmakers.

One of TTR's most effective tactics was the motorcade rally. In addition to assembling crowds of demonstrators, TTR chose an auto-accessible landmark on a well-traveled route around the State Capitol Building. Activists publicized the "drive-by" rally in advance with local radio talk show hosts. Some hosts actually wanted to co-sponsor or cover the rally live, as the honking horns made a wonderful backdrop for talk radio. Citizens who were otherwise too busy to attend a rally on foot were more inclined to take a five-minute detour on their way to or from their jobs, for the chance to make a little noise all while remaining in their cars. In the case of Tennessee, several "honk if you hate the income tax" rallies circled the State Capitol building for hours on end.

TTR's influence continues to this day. Nashville Tennessean columnist Tim Chavez, no fan of TTR, nonetheless gave the group its due when he wrote, "Governor Phil Bredesen's (D) first two years in office have been dictated by this group -- across-the-board cuts in departmental spending, no income tax and TennCare [a state health program] reform. ... The rise of the horn-honkers was made possible by the decline of credibility in two state institutions: its government and its news media. When trust is lacking, people are more apt to be informed and led by new voices."

From Capital Ideas Newsletter
Edited by Pete Sepp
Vice President for Communications
National Taxpayers Union Foundation/USA
www.ntu.org

Utah: "Open Space" Tax Increase Thwarted

In November 2004, state activists in Utah defeated a so-called "open-space initiative" that would have required taxpayers to open their wallets wide. Initiative 1, a statewide referendum, would have increased state sales taxes by a seemingly innocuous 1/20 of one cent. Yet the total amount of revenue raised was far from innocuous - $195 million over 13 years, along with an additional $150 million in state debt. Owing to this considerable burden, opponents of the measure, led by Utah Taxpayers Association (UTA), relied on earned media, debates, and broadcast e-mails to alert voters to the problems of Initiative 1.

Most observers expected the measure to pass easily, as its predecessors had in other states. After all, initiative supporters had a litany of well-rehearsed (if misleading) arguments to muster, such as warning that children would not be able to drink the water unless their measure passed. Backers also wanted the public to believe that the state was spending too little on environmental protection, and that their solution would only cost families the equivalent of two movie tickets per year.

But according to UTA Executive Director Mike Jerman, opponents of Initiative 1 had powerful facts on their side. Current government and private efforts to protect their environment are significant, which has made Utah's air and water quality better than ever. Besides, Utah voters should be insisting on tax cuts, not "nuisance" tax hikes that nonetheless take a steady toll on their wallets. In the final analysis, voters responded to UTA's reasoned appeals, and defeated Initiative 1, 55 percent to 45 percent.

From Capital Ideas Newsletter
Edited by Pete Sepp
Vice President for Communications
National Taxpayers Union Foundation/USA
www.ntu.org

Alaska: Local Tax Limit Renewed

Even as many taxpayer groups across the nation were preparing for the November 2004 election, voters in Fairbanks, Alaska had already given their approval to an important local tax limit. On 5 October 2004, Fairbanks residents enacted, 60 to 40 percent, a two-year extension of the popular "Borough Tax Cap" (without this continuance, state law would no longer have protected this citizen-initiated measure, leaving it subject to tampering by local officials). The ordinance limits local revenue growth to inflation, plus revenues from new buildings and land entering the tax rolls, bonds and services approved by the voters, payments of new judgments against the borough, and a few restricted emergency situations.

Volunteers with the Interior Taxpayers Association (ITA), the group that first ushered the tax cap to passage in 1996) reported a last-minute surge in citizens signing the petition to continue the tax cap in the final days before the ballot certification deadline. ITA President Donna Gilbert told the Fairbanks Daily News-Miner, a local newspaper, that residents "were just pouring in to sign" the Tax Cap continuance proposal at the Tanana Valley State Fair in August, giving the group sufficient support to qualify their measure for the ballot.

From Capital Ideas Newsletter
Edited by Pete Sepp
Vice President for Communications
National Taxpayers Union Foundation/USA
www.ntu.org

Massachusetts: The East Coast Tax Revolt

Twenty-five years ago, Citizens for Limited Taxation (CLT) placed Proposition 2-1/2 directly on the ballot for voter approval. We collected the first round of voter signatures on our petition for a direct vote in the fall of 1979, waited for the inevitable legislation rejection (155-5 in the House) in May, then collected more signatures and placed the petition on the November ballot.

The campaign was intense: CLT and its allies (the Massachusetts High Technology Council, the Massachusetts branch of the National Federation of Independent Business, and the Massachusetts Auto Dealers) were up against the entire political, educational, and Big Business establishment. On November 4, the same night that Ronald Reagan was elected President, we won 59-41 [percent] and the rest is, literally, Massachusetts history.

The Swedish Revolt Against Rising Property Taxes -- Demonstrations Outside the Swedish Parliament

In 1996 house owners in Sweden were choked by increased taxes on their homes by 50 percent as a result of a deal between the ruling Social Democratic party and the supporting Communist party. As Sweden not only has a specific property tax, house owners are also punished by a so-called wealth tax. The two taxes together climbed up to 3 percent (of 2/3 of the assessed value of the whole property).

For many house owners around the bigger cities and in the archipelago the two taxes easily amounted to ten thousand dollars or more per year. The property and wealth tax are paid with after-tax income, which made it even harder to pay the tax bill. Just like what happened in Eastern Europe after the Communist takeover more and more people had to leave their homes. They could not afford to pay these high taxes.

The Swedish Taxpayers Association received alerts from members all over the country, and Bjorn Tarras-Wahlberg, President of the Association at that time, worked hard to encourage different home owner associations all over the country to form a national unit of resistance against the property tax: All of Sweden against the Property Tax.

Tarras-Wahlberg convinced partners and allies to participate in a huge spring demonstration against the property tax and managed to get all the six party leaders (except the Social Democratic Prime Minister) up on the speaker's platform in front of all 15,000 - 20,000 demonstrators.

Participants were encouraged to make their own banners and thousands marched from a park in the center of Stockholm -- with one orchestra in front and another one at the end -- to the Parliament building on a weekday when all politicians were on place.

Like the Half Left campaign for lower income taxes, a sticker with the text "Abolish Property Tax" was distributed to more than 1 million people to be put up on the back side of the car, or on the letter box outside the home, and could be seen all over the country