A permanent wound: How the slave tax warped Alabama finances

In the late spring or early summer of 1822, a man named Bolling Hall made a list of all his property before taking it to the Autauga County assessor and paying his taxes.

On the left side of a piece of parchment, Hall listed hundreds of acres of land he’d acquired since leaving Georgia four years before. He would pay between $2 and $8 an acre on it.

He listed a gold watch, as well as a coach, which he valued at $250. The state would collect about $2.50 on it.

And in the top right-hand corner, Hall listed “15 negroes under 10 years” and “30 negroes over 10 years.”

By law, Hall would have paid 25 cents for every slave younger than 10, and a dollar for those older than 10 — $33.75 for the human beings whose unrequited toil allowed him to buy coaches and gold watches.

Alabama tax assessments that year — and for more than four decades after — would include nameless columns of slaves whose existence was critical to the operations of state government. Alabama’s compact with the institution was, for whites, very profitable, and nowhere more than in the state's slave tax.

“It holds the land tax to very low levels because most of the revenue comes from the slave tax,” said J. Mills Thornton, a retired University of Michigan professor and historian of the South. “The result is that small farmers pay virtually no direct taxes.”

As slavery twisted politics and society in Alabama and throughout the South, it also warped the state’s finances. For decades, the slave tax was a major pillar of the state’s tax system. Historians estimate that at least through the mid-1850s, the tax on the wealth created by the men, women, and children suffering exploitation — and often, physical and sexual assaults — was the single biggest revenue source for state government.

Like slavery, the slave tax would leave a permanent wound on the state. When slavery died, so did the tax. Reconstruction-era efforts to replace the lost revenue with increased property taxes — the only major source left — sparked an angry reaction. Legislators rushed to introduce tax restrictions after Reconstruction without making serious efforts to find other sources of revenue.

That set in place decades-long policies that, to this day, make it difficult and sometimes impossible for Alabama to generate enough revenue to pay for its state services.The $1.8 billion General Fund, which pays for most noneducation services in the state, should grow no more than $25 million in 2018; the state’s Medicaid agency alone has requested a $44 million increase for the year.

“The slave tax in a weird way was a stabilizer,” said Susan Pace Hamill, a University of Alabama professor and expert on state taxation. “It was a bad stabilizer — the whole system of slavery was a bad stabilizer. A shameful stabilizer.”

The fruits of exploitation

Taxes on slaves weren't limited to Alabama. In a 2003 article, Boston University School of Law professor Kevin Outterson wrote that the slave tax brought in anywhere from 30 percent of public revenues to (in South Carolina) 60 percent. The federal government levied slave taxes from 1798 to 1802, and again from 1813 to 1817, both times to pay for war.

“From colonial times to the Civil War, American governments derived more revenues from slave taxes than any other source,” Outterson wrote.

Approaches to taxation differed. In Georgia, the tax on a slave was equal to the tax on 100 acres.

“Some states like Louisiana had elaborate categories by age and sex,” said Robin Einhorn, a history professor at the University of California Berkeley. “You’d have female slaves between ages of X and Y. Louisiana had a very elaborate schedule.”

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Alabama residents paid a slave tax while part of Mississippi Territory. At statehood in 1819, Alabama abolished the tax. The resulting budget shortfall led to its swift return and kept it in place until the end of the Civil War.

The state used a head tax. Until the decade before the Civil War, Alabama generally had two rates: One for enslaved people under the age of 10, and one over it. The rate of taxation varied, but by the 1840s had settled into a 10-cent tax for those under the age of 10, and a 50-cent tax for those between the ages of 10 and 50.

Whatever the rate, a slaveholder's tax bill was tiny compared to the slave's value. In 1860, an Alabama slaveholder would pay no more than $1.10 in taxes (about $30 in 2016 dollars) for a 15- to 30-year field hand. The slaveholder could sell that same person for up to $1,600 (equal to about $43,000 today). The total value of slaves in the South that year, according to "Alabama: The History of a Deep South State," was $2 billion.

“It’s the 1860 census that has the summary number that there’s more wealth held in slaves than railroad and industrial assets combined,” Einhorn said.

The wealth the slaves generated — largely from cultivating cotton — was large.

“Alabama was one of the wealthiest states in the United States at the time of the Civil War, and so was Mississippi, in part because they’re only counting white people,” said Alfred Brophy, a professor at the University of North Carolina School of Law.

By 1850, cotton accounted for 50 percent of the United States’ exports. 23 percent of that came from Alabama.

Non-slaveholding whites may not have enjoyed the wealth, but benefited from the system. In the antebellum era, Thornton estimates, the “wealthiest third of the citizenry paid at least two-thirds of the taxes.”

“Putting aside the moral depravity of slavery, and I don’t imply otherwise, the antebellum tax structure of Alabama was progressive in the sense that the burden fell more on those able to pay,” Hamill said.

The state’s politics helped sustain that system. The Democratic Party, which represented small farmers, dominated antebellum Alabama, but most slaveholders — who clustered in the Black Belt — belonged to the rival Whig Party. State apportionment in Alabama only counted whites. As a result, Whigs almost never held a majority in either chamber of the Legislature.

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There were a handful of other taxes, such as taxes on merchants’ gross receipts, but for the most part, they made little impact on white Alabamians.

“They have no sense of being taxed, and they feel taxes are borne by slaveholders, particularly large slaveholders,” Thornton said.

Oppressive laws; tax shifts

But slavery required force, and the records of the legislative acts in the antebellum list ever-more paranoid and oppressive laws in Alabama. Where slave taxes generated revenue for the government, taxes on free blacks -- aimed at punishment. In 1862, a free black man paid $5 in taxes, compared to 75 cents for a white man.

“That’s harassment,” Einhorn said. “At least in theory, you would sell your assets, or you could lose your farm for failure to pay taxes.”

In 1839, the Legislature approved a law that allowed any person to seize any free black person who had entered the state since 1832 and make them a slave. The same year, the Legislature approved a measure that required the imprisonment of free blacks serving on ships that came to Alabama until the ship left the harbor. In 1843, the Legislative approved 1 and 2 percent taxes on slaves (based on age) to create a fund to compensate slaveholders if the state executed their slaves for capital crimes.

By 1860, the Legislature forbade the emancipation of any slave and removing any slave from the state.

The slave tax, meanwhile, remained a pillar of state finances. The tax accounted for 46 percent of all state revenue in Alabama in 1849 (in Georgia, the tax was more than 49 percent of all revenues that year.)  But the tax system itself was shifting, as wealthy slaveholders became more involved in the Legislature.

Helped in part by a rare Whig victory in 1849 — the party took control of the Alabama Senate — the Legislature had by 1850 changed the state’s property tax structure. Land was usually taxed in four different “quality” categories, which set a dollar rate for each acre of land assessed. By 1850, the Legislature approved an ad valorem rate of taxes, which taxed all land at a fixed rate of 20 cents per $100 of value. The system aimed to reflect land values, but also pulled smaller farmers into the tax structure.

Except for a provision for highly-skilled or disabled individuals, the Legislature did not extend the ad valorem system to slaves.

“The Whigs fight it,” Thornton said. “And their resistance has some effect. When the ad valorem tax was adopted, it was only adopted for land.”

Instead, the Legislature adopted a new range of age classifications for slave taxes, broadly based on the value the slave could create. Accordingly, taxes on slaves between 15 and 30 were highest; those on children and the elderly were the lowest.

The new system drew in far more taxpayers than the old one. By 1860, real estate taxes replaced the slave tax as the largest source of revenue, though the slave tax remained a major source of revenue for the state. In 1862, amid the Civil War, the Legislature doubled the taxes on slaves, to pay for the war effort.

The reckoning

The slave tax went after the war, but the services it paid for did not. During Reconstruction, Republicans tried to make up the difference with property taxes — the only major source of revenue left — which embittered a population that had grown used to slaveholders paying most taxes.

“The history is complicated, but we can say with some certainty that that probably hurt small landowners more than big landowners, and fueled their resentment,” Hamill said.

When Democrats recovered control of the Legislature in 1874, they called a constitutional convention. That convention created a document that began the slow disenfranchisement of black voters. But it also put caps on property taxes.

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“An eminent statesman has said, ‘the power to tax is the power to destroy,’” said Leroy Pope Walker, a Confederate general who served as president of the convention. “Governments should provide against possibilities, as possibilities often become facts.”

But the Bourbon Democrats who ruled Alabama for decades — and imposed even more stringent property tax caps in the still-operative 1901 Constitution — never considered the possibility of taxes that might try to replace the lost slave tax. For the most part, officials have avoided the issue. An income tax approved in 1933 enshrined tax rates in the Constitution; the state income tax rates still reflect Great Depression-era values. In the 1970s, the George Wallace administration advanced the “lid bills,” which further restricted the property taxes in the state.

Those revenue shortfalls are one of the lasting legacies of slavery: A state government that struggles to pay its bills.

“Racial policy is an obvious wound that festers,” Thornton said. “Tax policy is much less so, but it is one of the festering wounds of slavery.”