IF ONE HAD to pick the political myth of the decade, the leading candidate could easily be what lay behind "the great tax revolt of 1978."

Business conservatives, muttering about government spending and ending up as the biggest beneficiaries of Proposition 13 and its clones, have managed to convince people that taxpayers were rebelling against growth in public outlays. But the real problem, it turns out, was that businesses were already getting too big a tax break, that property taxes increasingly were being shifted away from them and onto homeowners.

Though the idea might give a Howard Jarvis apoplexy, in reality the tax revolt of 1978 was created largely by business tax relief at the expense of homeowners.

Consider what happened in California, incubator of the revolt. Taxes on homes there increased about 110 percent between 1975 and 1978 -- while business assessments rose only 26 percent. By 1978, when Proposition 13 was ratified, single-family homeowners were carrying about 44 percent of California's property tax load; five years earlier they had paid only 32 percent. Small wonder that California homeowners were angry, especially since their excessive share of tax payments was contributing indirectly to a massive state budget surplus.

Why has the tax revolt been misunderstood, continuing to provide pressure for reduced government spending?

First, Jarvis & Co. shrewdly focused attention strictly on the rising homeowner taxes -- rather than on the growing inequity of the tax burden, on who was carrying what load. Second, there is wide misunderstanding of government spending statistics, which can indeed be misleading; while government takes in more dollars every year, largely because of inflation, government spending as a fraction of real income leveled off around 1974. Federal spending as a portion of gross national product actually has declined slightly, while state and local spending has remained about constant.

Moreover, the tax-burden shift away from business and onto homeowners has been difficult to detect because most states don't keep statistics on who pays what share of the property tax. To get those estimates, you have to compile figures on total assessments by type of property and then apply average rates, factoring out credits and exemptions.

One thing you come up with is the fact that local government did not grow fat from property tax revenues. On the average, property taxes declined as a fraction of personal income in all but eight states in the five years preceding the tax revolt. But try telling that to homeowners whose property taxes just doubled -- a blow arriving on top of the steadily growing share individuals also have been paying of state and federal income taxes.

It didn't matter to Idaho homeowners, for example, that in their low-tax, low-spending state, total property taxes had been rising far less than the rate of inflation. Despite this, Idaho was the one state last November where voters ratified a Proposition 13 clone, placing the blame on government spending. The homeowners didn't realize that their property tax rise really reflected a major shift in that burden away from business and onto them.

That shift, in fact, was even more extreme than California's. In 1969, Idaho homeowners shouldered about 24 percent of the property tax burden. By 1978, the year of the revolt, they were carrying more than 44 percent, a nearly doubled share of the load.

The shifting tax burden has largely eluded policymakers as well, in part because it was not deliberate.

Some of it was produced by inflation; as the value of homes increased faster than the value of railroads or factories, housing came to absorb a heavier share of the tax load. But the shift is also the result of other independent trends.

First, homes and businesses are assessed under different formulas. In most states, residences are assessed according to their actual market value, while businesses are assessed by converting the income they generate into a presumed capital worth. This is reasonable enough in a period of stable prices, but during a period of inflation this formula protects businesses against inflationary increases in assessment -- while homes pay full freight.

Second, the spurt in inflation coincided with a little-noticed series of state court decisions and legislative reforms that had the effect of increasing homeowner taxes.

Since colonial times, local tax assessors customarily valued homes and small farms at far below their actual worth. During the 19th century, when states began to levy property taxes on business plant and equipment and on paper wealth, many state constitutions were amended to require that all property be assessed and taxed uniformly.

These so-called "uniformity clauses" were honored mostly in the breach. Local assessors are usually elected, and when property taxes on homes rise disproportionally, they are not re-elected. Until very recently, the tax assessor's survival instinct amounted to a crude, extra-legal check against a tax shift onto homeowners.

But beginning in the late 1950s, state courts showed a new willingness to wade into this legal thicket, and they gradually agreed to lower assessments on businesses that were over-appraised relative to homes. By the late 1960s, some courts grew bold enough to dictate comprehensive reassessments.

In California, the state legislature passed a 1966 law requiring all property to be assessed at a uniform 25 percent of value. A year later the Idaho supreme court ruled for a group of utilities claiming to be over-valued. Courts in Massachusetts in 1974 and New York in 1975 held the customary system of "fractional assessment" invalid and ordered reassessments. In all, some 20 states revised their assessment formulas.

The local assessor was thus stripped of his fail-safe role just when housing prices were climbing through the roof. As a result, higher prices translated into higher taxes. In mandating new uniform assessment ratios, most legislatures failed to appreciate how this might mix with inflation. Ironically, in California, where the 1966 reform was stimulated by an assessment scandal that sent several assessors to jail for taking bribes from businesses, it was assumed that the new system would lower residental taxes.

Third, in the past decade state rivalries to attract industry have intensified. In particular, older industrial states are locked in a fierce competition to lure or retain business through the tax system. New York, Missouri and Ohio have led the way in offering a profusion of abatements and exemptions that forgive all or some of the taxes that otherwise would apply to new industry. In downtown Boston and New York, for example, virtually nothing has been built in recent years without some tax concession.

Among public officials, Cleveland's scrappy mayor, Dennis Kucinich, is virtually alone in resisting these business tax preferences. While there is much controversy over whether business tax inducements have their intended effect of stimulating development that would not have occurred anyway, there is no dobut that as business pays a declining share of the tax load, other taxpayers must make up the difference.

As part of their moves to improve "business climate," many states also have repealed taxes dating to the 19th century on business inventory or industrial plant and equipment. While these taxes were administratively cumbersome and may have penalized capital-intensive or high-inventory businesses, they nonetheless contributed a large portion of tax revenues. Though a few states such as Michigan replaced these traditional taxes with other taxes on business, others like Ohio just repealed them.

Taxes on housing, then, have come to carry an ever-increasing share of the tax load at a time when the net worth of most ordinary people is increasingly concentrated in their homes. Consequently, the wealth of middle-income and lower-income Americans is heavily taxed, while most other wealth, such as stocks, bonds and luxury commodities, escapes taxation as property.

Besides California and Idaho, a survey of tax assessment and collection data reveals that:

Oregon homeowners paid 53 percent of the property tax load in 1978, up from 45 percent in 1974. The commercial and industrial share dropped sharply. Oregon voters narrowly rejected two different tax reduction initatives, leading the state legislature to enact a comprehensive tax relief package.

Wisconsin homeowners paid 58.2 percent of the property taxes in 1978, compared to 50.8 percent in 1971. The industrial share dropped from 17.7 percent to 8.5 percent. In Wisconsin, the new Republican governor sponsored a two-month moratorium in income taxes and a onetime homeowners' tax credit.

Ohio homeowners paid 39.9 percent of property taxes in 1978, up from 36.7 percent in 1973. In Ohio, an even greater tax shift is forecast in future years, because a state supreme court decision enforcing equal assessment ratios has not yet taken full effect, and because a legislative action intended to offset increases in taxes produced by inflation inadvertently gives greater reductions to business.

It is estimated that in 1980, Cuyahoga county (Cleveland) residential taxpayers will pay $108 more in property taxes on average, while commercial and industrial taxpayers will pay $362 less. At the current rate of inflation, Cleveland taxpayers will pay an estimated 80 percent of the property tax load by 1982.

Minnesota homeowners paid 49.3 percent of property taxes in 1977, up from 41.5 percent in 1973. The industrial and commercial share fell proportionately.

In some cases, the tax shift that would have occurred was offset by deliberate policy. Michigan, for example, was one state that kept shares of the tax load relatively stable by enacting a 'circuit-breaker' law, which refunds a portion of the property tax when the tax exceeds a percentage of income. This approach makes the property tax more progressive, as well as stabilizing the residential share. Last November, Michigan voters rejected a Proposition 13 look-alike and approved a more moderate spending 'cap,' limiting future government growth to the rate of growth in Michigan's personal income. Oregon, Minnesota and Wisconsin would have had even sharper tax shifts without their circuit-breaker programs. Colorado and Nebraska, which rejected tax limitation initiatives, also apparently did not suffer tax shifts.

Ironically, states like California, Idaho and Oregon, which pioneered 'reforms' intended to modernize property tax administration, produced as by-products higher residential taxes and voter rebellion. In 1975, Idaho's state tax commission got tired of waiting for local assessors to comply with its equalization orders and brought in an out-of-state consulting firm to do the job. The firm, oblivious to local political needs, equalized assessment ratios in a single year -- producing a 50 percent hike in residential taxes in the state's largest county.

Ironically too, states with antiquated tax systems have managed to avoid the shift. In many Massachusetts cities, assessments bear little resemblance to actual values. Tax rates in Boston are an astronomical $252 per $1,000 of assessed value, but assessments on homes have lagged well behind market values. In 1974, however, the Massachusetts supreme court ordered all cities to comply with the constitutional requirement of uniform assessments at full value. This would have shifted an estimated $265 million in tax burdens onto homeowners. The voters responded by approving an amendment legalizing different rates for different types of property.

New York got a similar court ruling in 1975. Like Massachusetts, New York homeowners in the past were protected against a tax shift by horse-and-buggy assessment practices. In the wake of the court ruling, known as Hellerstein , the legislature has not been able to agree on what to do to head off a tax shift. But if New York fails to either enact homeowner tax relief or legalize split rates, a state assembly committee estimates that compliance with the Hellerstein standard will increase taxes on New York City homeowners by 113 percent -- while property taxes on business will drop about 26 percent. The same kind of shift will also occur in Albany, Buffalo, Rochester and Yonkers. Devising a remedy is especially difficult because the effects will not be uniform throughout the state.

Attempting to stabilize shares of the tax load can be very tricky business. For instance, South Carolina in 1976 sought to compensate for a tax shift onto homeowners by authorizing split rates, assessing industrial property at 10.5 percent of its actual value and homes at 4 percent -- only to find after the fact that the historic gap between assessment on homes and businesses in many countries had been far wider. The 'reform' may turn out to exaggerate the burden on homeowners.

Even though the tax shift to homeowners was the largely hidden cause of taxpayer protest, the tax revolt has taken on a life of its own as a reaction to "big government."

Only in Ohio, where a statewide consumer group, the Ohio Public Interest Campaign, and Mayor Kucinich vociferously campaigned against business abatements -- and in Massachusetts, where mayors and consumer organizations recognized the probable effect of the state supreme court's assessment decision -- did the distribution of the tax load catch on as a pressing issue.

Elsewhere, conservatives have largely succeeded in focusing attention on the total tax load rather than on who is and should be paying it. Thus balanced-budget amendments and conservative assertions about excessive taxation strangling business have dominated the tax policy debate. Spenders and taxers are on the defensive. After Jarvis, the 1978 federal tax reform bill, intended to close loopholes, was transformed into a measure to reduce capital gains rates.

The generally conservative fiscal mood has inspired several state laws limiting taxes and expenditures, which will certainly force government to be more deliberate in its priorities. But as the more stringent of these limits translate into cuts in public services, the voters may begin to pay more attention to the distribution of the tax load, as well as its size, to control their tax bills.