The Burden of Negro Schooling: Tax Incidence and Racial Redistribution in Postbellum North Carolina

Abstract

The disparate allocation of public revenues for education reflected racial discrimination in the public sector of the South.1 Suffrage restrictions in North Carolina after 1901, in conjunction with changes in the tax law, enabled whites to increase spending for the public education of white children without increasing it for black children.2 Officials in North Carolina justified (and condemned) this growing racial disparity in spending by asserting that whites as a group subsidized the education of blacks. Their estimates of the tax burden of education expenditures received national attention at the time and continue to be cited by current scholars.3 Their estimates, however, only consider the legal and not the economic incidence of the property tax. Tax shifting increases the burden of school taxes on renters and workers while reducing the tax burden on property owners. Because whites owned a disproportionate share of the land, the shifting of the property tax reduced the burden on whites while increasing it on blacks. This note focuses on the economic incidence of public school taxes. This represents a significant departure from previous studies in that tax incidence is explicitly considered in the context of a single sector model of an agrarian economy. The burden is shown to be largely dependent on the share of land and labor supplied by blacks and on the elasticities of supply and derived demand for property. While no estimates of the burden are presented, the necessary conditions under which blacks paid for their own education are derived.