Times were tough in 1932 Mississippi.
The state began the year with a grand total of $1,326.00 in the state treasury. There were outstanding warrants against that amount by creditors for almost $6 million. Besides that, there were still Confederate Veteran pensions to be paid, and many school teachers hadn’t been paid in a year.
One of the first acts of the 1932 legislative session to allow the state tax commissioner to borrow $750.00 so he could buy postage stamps and mail out tax notices. It takes money to make money, as they say.
All total, the state started the year $50,000,000 in debt.
The plight of the farmer was even more dire than the state institutions. About 11,000 Mississippi residents had been made homeless early in the year to due to flooding. Only 64% of property owners had paid their ad valorem taxes. Besides this, Mississippi maintained it’s long held status as the poorest state in the union
Then came tax sale day. By state law, land owners that did not pay their property tax were subject to having their property auctioned off at the court house by the sheriff to recoup unpaid taxes.
On a single Monday in April, 1932, one-fourth of the state of Mississippi was sold. Tax sale hammers went down in 74 counties affecting almost 40,000 farms. Old plantations as well as modest shanties were sold by the thousands.
People generally blamed “high taxes and cheap cotton” for the ridiculous tax sale. The cost and size of government was leading to communism, according to newspaper editors.
In fact, the vast majority of the sold land went to the state, or mortgage companies that already had a lien on the property to protect. If there were no buyers, the creditors took it to protect their lien. If there was no such creditor, the state took it, with no money going towards to the state.
The state of Mississippi bought about 400,000 acres in 1932. This brought the holdings of the state to about 1,400,000 acres of land, slightly less than the total acreage of Delaware.
As for the farm owners, they retained possession but not title, for up to two years. During these two years, they had the right to pay the delinquent tax and “redeem” the property from whoever bought it at the tax sale. Otherwise, it was gone for good.
The state relied on tax on land for the vast majority of its budget. It was a common complaint of the populists at the time that states depended too much on land tax. Rural land was owned or farmed by the poorest of the poor, who bore the burden of property tax. Meanwhile, wealthier industrialists who owned millions of dollars in equipment and tangible personal property bore very little tax burden.
The pathetic finances of the state and the failure of the land tax led to the state’s first substantial sales tax. After great drama, the state legislature approved a 2% sales tax in 1932. The results appeared to be amazing, increasing the state treasury to almost $2 million by the end of the year.
The burden on the farmer was lessened, and the diligent state tax commissioner could buy all the postage stamps he wanted.
Garner, Alfred W., A Note on the Mississippi Sales Tax, Southern Economic Journal, Vol. 1, No. 2 (Jan., 1934), pp. 24-27.
One-Fourth of a State Sold for Taxes, Literary Digest, CXIII, May 7, 1932, p. 10.
Winter, William, Governor Mike Conner and the Sales Tax, 1932, The Journal of Mississippi History, Vol. XLI, August 1979, Number 3, Mississippi Historical Society, Jackson, Miss. available at https://bobmannblog.com/2013/04/15/a-thrilling-mississippi-sales-tax-saga/