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Posted: October 15, 2013

A closer look at the history of a famous tax

How little we've changed

David Sneed

Some people like to say Americans have always hated taxes, and they give as proof the night of Dec. 16, 1773, when patriots threw some crates of tea into Boston harbor.

Actually, though, at issue that night was a tax reduction, not a tax increase. Some hooded and shadowy figures rioted across the wharfs because a tax was being lowered, not raised, as we so often think.

At the time, the East India Company was required by law to take their cargos of tea directly to a port in England. After it arrived, and the steep import taxes were paid, it could then be sold to American middlemen who would re-ship it to the Massachusetts colony.

The British import tax and the middleman markup made tea quite expensive over here.

Meanwhile, the Dutch were all too happy to sell smuggled tea directly to the Americans. This contraband and untaxed tea was slightly inferior to the English teas, but it was a lot cheaper.

The British East India Company complained so much that the British finally passed the Tea Act of 1773 which allowed the company to go directly to the American market, thereby bypassing the British taxes and the American merchant middlemen. The crown (wisely) sought to eliminate smuggling by competing with it on price.

The legal importer did, however, still have to pay a (much smaller) import duty on the teas that went directly to New England. It was, in fact, a new tax, but it replaced a much higher one which had been in place for decades.

So good quality English tea now became cheaper than the smuggled Dutch tea, which prima facie seems like a win-win for everybody.

So who rebelled? The American middlemen, of course, and the smugglers. The Tea Act was hurting Big Tea in America.

And who did the new tax law help?

The American people. It made better tea cheaper for everyone who wasn’t involved with the tea business.

But with some savvy marketing, a few American businessmen resorted to what we’d call terrorism today and attacked a rival business, throwing their products into the harbor.

This act of defiance made the British assume control of the (until then) self-governing colony of Massachusetts.

Which started a war: the American War of Independence.

And that brings us to the modern Tea Party. They’re aptly named, it seems, since they also fight for business interests while using liberty as a rallying cry. It’s nice to see we haven’t changed all that much in 250 years.

(Editor's note: The opinions are the author's, and do not necessarily reflect the views of ColoradoBiz.)

David Sneed is the owner of Alpine Fence Company,and the author of" Everyone Has A Boss– The Two Hour Guide to Being the Most Valuable Employee at Any Company." As a Marine, father, employee and boss, David has learned how to help others succeed. He teaches the benefits of a strong work ethic to entry and mid-level employees. Contact him at  David@EveryoneHasABoss.com

Enjoy this article? Sign up to get ColoradoBiz Exclusives. The opinions expressed in this article are solely that of the author and do not represent ColoradoBiz magazine. Comments on articles will be removed if they include personal attacks.

Readers Respond

Did your premiums go up over Obamacare? Guess what? Mine have gone up every year since 1992. After this hike they should keep pretty steady. And rich people always say "business will be hurt" when they really mean "my pocketbook will be hurt." It's all marketing and lot's of GOP's are too dumb to see they're being manipulated. By Kevin T on 2013 10 18
The author's selective use of history is nothing novel. Lots of “re-education” is clarifying our flawed national foundation. Today even a guy with limited credentials can use a reference to defense of business interests to conjure visions of an association of scoundrels. Proof? Everybody instantly knew he was taking a dig. He constructed his whole article around it. Business interests are bad. Contrast this with early American pride as a nation of business opportunity and Ben Franklin's admonition on "doing well by doing good". In the collective national consciousness the advice resonated for two centuries as strategy for success. Fast forward to 2014. Who will get the blame when your insurance goes up by thousands per year, and friends join the 29’ers? Business, of course. The government was doing good. Critics were not defending people. They were scoundrels defending business. By Kodiak on 2013 10 16
If for no other reason, David's column today is valuable because it points out a truth. No other justification is required. And, John, the first tax imposed on the colonists was the Stamp Act. Passed by Parliament in March of 1765, its purpose was to pay for the costs of British troops in the American colonies, and pay off the national debt from the war. This was a direct tax on public documents, including newspapers, customs documents, legal papers, and licenses. By Vicki on 2013 10 15
David, excellent column. 250 years later, stupidity and treachery are still masquerading as patriotism. By Fred on 2013 10 15
From Wikipedia: The protest movement that culminated with the Boston Tea Party was not a dispute about high taxes. The price of legally imported tea was actually reduced by the Tea Act of 1773. Protesters were instead concerned with a variety of other issues. The familiar "no taxation without representation" argument, along with the question of the extent of Parliament's authority in the colonies, remained prominent.[41] Some regarded the purpose of the tax program—to make leading officials independent of colonial influence—as a dangerous infringement of colonial rights.[42] Colonial merchants, some of them smugglers, played a significant role in the protests. Because the Tea Act made legally imported tea cheaper, it threatened to put smugglers of Dutch tea out of business.[44] By Allen on 2013 10 15
I suppose my detractors have more faith in the words of politicians than I do. Personally, I believe there's usually a public reason and a private reason for everything they do. One could say the same for most humans I suppose. And rarely does the private reason make it to the history books. But the facts as I've stated them are undisputed. The tax WAS lowered, and wealthy smugglers and middlemen DID lose because of it. By David Sneed on 2013 10 15
David, in certain older civilized cultures, when men failed as entirely as you have, they would throw themselves on their swords. By Rynaldo on 2013 10 15
Aside from your mischaracterization of the Tea Party, how does your "article" / political commentary fit on a professional site billed as: "your go-to source for great insights, tips, how-tos and advice from more than 600 top Colorado business professionals"? Worthless "articles" like yours highlighted on ColoradoBiz only detracts from an otherwise useful source of information. By Scott on 2013 10 15
Perhaps the author of this article would to better to read the history of the Boston Tea Party rather than provide his own political views. http://en.wikipedia.org/wiki/Boston_Tea_Party The BTP was due to "Taxation without Representation." It was the first time the Colonies were taxed directly by the British government and done so without the Colonies having any representation in the British Parliament. Nothing to do with "unhappy businessmen." By John on 2013 10 15
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