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Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Taxation Without Representation

What it is:

"Taxation without representation" is a phrase commonly thought to have been first made famous by Boston lawyer James Otis in 1765. It refers to the idea of imposing taxes on people who have no recourse against or control over the taxing authority.

How it works (Example):

As the American colonies grew in the 1760s, it became increasingly apparent that their needs and desires were not being adequately represented in the English Parliament. 

When the Americans decided that the taxes paid to England were getting too high, they famously protested by boarding the HMS Dartmouth on December 16, 1773 and dumping 342 chests of darjeeling tea into Boston Harbor. The "Boston Tea Party" was the pinnacle of the Americans' resistance to the Tea Act, a levy imposed on the colonists by the British Parliament earlier that year. The colonists believed the Tea Act was unfair "taxation without representation."

Why it Matters:

Taxation without representation was one of the underlying causes of the American Revolution. The American colonists believed that they should not have been taxed by a government unless they had a political voice in that government.

Taxation without representation is not just for the history books. Today, residents of the District of Columbia do not have full representation in the U.S. Congress, which is why their license plates are currently embossed with the phrase, "Taxation without Representation."