It’s no secret that I enjoy ballroom dancing. It is also no secret that up until the Second World War ballroom dancing was enormously popular in the United States. Imports such as the waltz and tango, homegrown inventions such as the foxtrot and jitterbug, and newly introduced Latin dances such as the rumba all rubbed shoulders, and perhaps stepped on each other’s toes, on the American dance floor. And those floors were huge! The Savoy Ballroom in New York City could check the coats of 5,000 people at a time, and had bands at both ends of its elongated dance floor.

This raises the question, what happened?

The answer appears to be that the Federal government taxed ballroom dancing out of existence, either accidentally or on purpose.

During the First World War a tax was introduced on entertainment. This sort of ‘sin tax’ is an understandable way to squeeze money out of the economy to pay for the costs of war. It was called the “cabaret tax” and when it was introduced in 1917 it levied a rate of 5% on all revenues from places where there was a combination of eating, drinking, dancing, and entertainment by live performers such as a singer and a band. The language of the law referred to cabarets and roof gardens which makes it sound as if only swanky places catering to rich people were targeted by the tax. However, the Revenue Service interpreted the wording to apply to any public place offering this combination of services, from the Stork Club to lowest juke joint.

5% dropped to 3% after the war was over. At this level, the tax did not alter the demand for dancing, or the willingness of businesses to provide venues that catered to that demand. Sadly, a new war brought the demand to raise the tax again and from 1940 to 1943 it crept back up to 5%.

By 1944 the Second World War had turned the corner, and Americans were already looking forward to the day when it would be over. But there was still the hardest part to come. In response, Congress again put the squeeze on consumers in the Revenue Act of 1944. Taxes on a broad range of goods and services went up. Many taxes doubled from 5 to 10%, but the cabaret tax was singled out for a 600% increase, going from 5% to 30%!

The initial hope was that patrons would be patriotic, and simply be happy to pay more. But that was unrealistic, and the law was changed after an outcry against it. However, the new rate was still 20%, still far above other increases.

The dance of death

At this level, taxation starts to change behavior. Dancing was simply unprofitable business. According to a study by the Treasury Department in 1945, industry revenues had crashed to less than half what they could have been expected to be if the tax had stayed the same. The business model had to change, and ballrooms with big bands no longer made sense, even though the taste of the public hadn’t changed.

As the big bands broke up, a new kind of club came to the fore – the jazz club. A jazz club didn’t have a dance floor, and there was often no vocalist with the band. As a result the club could avoid the cabaret tax entirely.

When servicemen and women returned from the war, they still wanted to dance and they could – at the USO, the church social, private parties and similar venues. But the big dance hall was dead. The punitive cabaret tax had killed an entire industry and all its supporting industries, such as big band musicians and dance schools.

The one thing that is hard to see is whether the decision to raise the cabaret tax from a survivable 5% to a catastrophic 30% was an intentional attempt to kill dancing in America. Based on the history of the tax, 5% already was the ‘wartime’ rate. No other tax was raised this high. (The second highest increase was light bulbs, which went from 5 to 20%. But light bulbs are a necessity, and there is no way consumers or manufacturers could change behavior.)

Yes, there were plenty of politicians from conservative parts of the country, places where the Southern Baptists or others could convince the population that dancing was sinful and against the Bible. It will probably never be known who wanted the cabaret tax raised to such a crazy level. But it seems to me that the decision was made with the intent to kill the business of dancing by taxing it out of existence.