Commemorating the Repeal of the Stamp Act

The history of transaction taxes in America

The United States Postal Service puts out many beautiful stamps. One current “forever stamp” isn’t as nice to look at, but you should still consider using it the next time you decide to send some snail mail. It commemorates the repeal of the Stamp Act in 1766.

If you’re like me, you probably have a vague memory of learning about the Stamp Act in grade school. Back then I wondered why it was such a big deal that the colonists had to pay more for stamps, because when I thought of stamps, I thought postage stamps. But for the American colonists, the Stamp Act was most akin to what people today call a “transactions tax.” It required the colonists to pay a tax on almost every legal transaction.

In the age before instantaneous communications, business transactions required more legal documents than they do today. Suppose you wanted to sell your crops back in the 18th century. How would a potential purchaser know that the crops actually existed, or that you had not already promised to sell them to someone else? It was not possible to pick up a phone or check online — verification could only be made by a certified document asserting both your ownership of the crops and their availability for sale.

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Such documents were common and used extensively. The free flow of credit, goods and services depended on them. Land transactions, which were frequent and important in the “land of opportunity,” were particularly dependent on these legal documents.

By taxing these types of documents (requiring them to have a stamp affixed as proof of payment of the tax), the Stamp Act imposed a cost, often a high one, on most business transactions, since most transactions couldn’t happen without these certified documents.

It not only made participating in the economy more costly, but it made the colonists more dependent on the English Crown. And this dependency was a feature, thought the Crown — not an unfortunate side effect. As legal scholars Justin DuRivage and Claire Priest recount, one colonial leader, Jared Ingersoll, mistakenly believed that if Parliament only knew how many transactions would be taxed, they would lower the tax: “I very well knew the information I must give would operate strongly in our favour, as the number of our Law Suits, Deeds, . . . & in short almost all the Objects of the intended taxation & Dutys are so very numerous in the Colony that the knowledge of them would tend to the imposing of a Duty so much the Lower as the Objects were more in Number.”

But Britain saw the imposition of this tax as a way to better control the colonies and protect against their rivaling English power. As England’s Junior Treasury Secretary said at the time, the Stamp Act would act as “some Check to those enormous Grants and Conveyances, which are so detrimental to the Colonies.” DuRivage and Priest put it this way: “Authoritarian imperial reformers in Britain had long expressed concern that colonial settlement and expansion needed to be restrained lest the colonies challenge Britain’s economic supremacy within the empire.”

So take this time to recall the importance of the Stamp Act as a transaction tax, and its centrality to the American Revolution. Then consider why people today would still want to restrain economic activity in order to control it out of fear that a successful economy poses a threat to the ruling class. Then, as nice as the planets or national parks stamps are, give a thought to using these commemorative stamps instead.

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