This Ohio Town Dissolved Itself Over a 1 Percent Tax Increase

And it's not alone.

When the Ohio village known as Amelia voted to dissolve its government last year, The New York Times seemed bewildered and a little alarmed. The paper acknowledged that it isn't exactly unprecedented for a municipal regime to shut its doors: Since 2012, it noted, "at least 12 in Ohio alone" have "dissolved or are in the process of doing so." But it added that these fights usually happen "for financial reasons, often because shrinking populations or reduced state funding make paying for basic services unsustainable." Amelia was growing, and it wasn't in particularly dire financial straits. The battle there erupted over what the Times called "a new local tax of just 1 percent."

That sort of conflict is not especially unusual. In a 2012 paper for The Yale Law Journal, Michelle Wilde Anderson—the same expert who told the Times that cities usually dissolve because of financial problems—lists tax revolts as another recurring reason towns think about disbanding. (Granted, most of the tax-oriented dissolution campaigns that she discusses failed.) And as the Times eventually mentions, the flashpoint in Amelia wasn't simply a new local income tax; it was the fact that the tax was imposed without public input, along with some plausible complaints that the town was wasting too much of the money it already had. The vote to shutter the government wasn't close: 68 percent backed the idea.

Anderson's paper points out that more cities considered dissolving in the first decade of this century than did in the final three decades of the 1900s. Nonetheless, she notes, the press frequently greets a dissolution campaign "as if it were the first in a generation or more, despite the fact that many such changes were being considered across the country at the same time." Even when the spotlight shines on one of these rebellions, the larger phenomenon somehow seems invisible.

Is that phenomenon something to be happy about? Are we better off with more municipal governments or with fewer?

It depends. Eliminating a government means scraping away a layer of taxes, bureaucracy, and sometimes corruption. But it also means replacing a regime that's close to home with one that's more distant and often less accountable. If that just means the county takes over plowing the snow and collecting the trash, it may be a net gain. If it means a new consolidated metropolitan government that's quick to raise taxes and slow to deliver services, it's not. There is a long history of top-down efforts to clear away small jurisdictions in favor of allegedly more efficient centralized systems, and even nominally grassroots efforts sometimes get a helping hand from on high. The State of New York, for example, has a Local Government Citizens Reorganization Empowerment Grant Program that encourages and helps fund the process.

In this case, the former Amelians will now be divided between two townships—not exactly a terrible fate. Things look different in villages that lost local control because of encroachment from without rather than a revolt from within. The American landscape is littered with the corpses of towns conquered by larger neighbors. Many of those formerly independent places persist as distinct neighborhoods: Bushwick was a self-governing township before it was absorbed by Brooklyn, which in turn was later swallowed by the City of New York.

Indeed, some communities have incorporated for basically the sole purpose of fending off annexation. While state laws vary, it is generally easier for a city to extend its boundaries into unincorporated land than to absorb an officially recognized town. (The rules for dissolution vary too: States have disparate approaches when it comes to whether a county can veto the process, say, or what happens to a dead city's debts.)

As far as local services and amenities go, different people have different preferences; the more fluid the system, the easier it is to satisfy that diversity of wants. Ideally, municipalities would function less like mini-states and more like voluntary associations, which constantly split, merge, and dissolve.

In the 1960s and '70s, the political scientists Elinor and Vincent Ostrom investigated the trend toward consolidating small jurisdictions into centralized regional governments. They concluded that the push was misguided. Local governance, they reported, is better when carried out by "polycentric" systems, in which political units of varying size can cooperate but act independently—operating under a shared set of rules but without a clear hierarchy.

That describes the status quo in much of the country: a patchwork pattern of not just villages and townships and counties but school districts, fire districts, water districts, and other local authorities whose territories do not always match the municipal boundaries, each with a mix of services it provides in-house, services it contracts out to commercial enterprises, services it contracts out to nonprofits, and services it contracts out to other governments. But there are more radical visions of polycentricity as well, with the furthest-reaching resembling the Russian anarchist Peter Kropotkin's vision of a world where social harmony emerges not from submission to a central authority but "by free agreements concluded between the various groups, territorial and professional, freely constituted for the sake of production and consumption."

Somewhere between Kropotkin and the status quo, the Swiss economists Bruno Frey and Reiner Eichenberger have called for a meshwork of "functional overlapping competing jurisdictions." The late Robert Nelson, writing in Reason in 2006, built on their idea to propose a "postmodern political order" in which "the size and functions of local government would be determined by a trial-and-error process of competition. Different institutional forms would contend with one another." Local governments would come to resemble residents' associations more than public bureaucracies; municipal bodies would see "a routine flow of mergers, breakups, divestitures, and other organizational rearrangements."

Put differently: If a neglected neighborhood in Cincinnati wants to become an independent urban village, it should be able to do so as easily as the people of Amelia dissolved their town 20 miles away. And why not? The right of exit is one of the most potent checks on power, and Americans should have more ways to exercise it than just by voting with their feet.