Virginia's Response to the Great Depression: Revenues and Expenditures

Abstract

During the Great Depression, states were forced to decide how to approach taxation and spending issues. Deficit spending was a relatively new theory at the time so many states took a very conservative approach. Virginia, even as a heavily Democratic southern state, was one of the states that was very conservative and disagreed with President Roosevelt’s New Deal. Virginian officials believed their highest priority was avoiding a deficit, followed by helping the people. This paper shows how the state governments chose to tax and spend with a comparison to comparable states. After completing a narrative of the political landscape, a regression analysis was completed to analyze independent variables and their relationship to per capita state tax revenue. Positive correlations indicated per capita state tax revenue increased as the independent variable increased. This analysis is very important to governments even today to develop public policies to help state revenues during a depression.