This entry was posted on 2/12/2007 12:12 AM and is filed under Footnotes.
"When there is an income tax, the just man will pay more and the unjust less on the same amount of income". Plato
If you live in the USA, or are an American citizen living abroad, you know that April 15 is a date to remember. (Actually, if you are filing for 2006, it's April 17 - 15 is a Sunday and 16 is Emancipation Day, so the IRS graciously gave us two extra days - you read it here first!). You can apply for an extension, but there's no escaping it, no exemption from its requirements. Thousands of men and women will expend countless hours in the days before this date trying to reconcile their incomes, capital gains, charitable donations and deductions, cramming their figures onto exquisitely dull government forms known to everyone by their index numbers 1040, 1099-DIV, 1099-INT and Schedule E. Every year, citizens, politicians, and even tax accountants, will cry out for a simpler way to settle their taxes. And every year, Washington will do precisely the opposite and add yet more lines to the Tax Code.
The Founding Fathers did not envisage it turning out this way. After all, wasn't it something about paying taxes to the British under the Stamp Act that started the whole Revolution thing? Educated in the Age of the Enlightenment, Hamilton, Jefferson, Washington and the rest, were schooled in the classics and familiar with the ways of the ancient Greeks and Romans and often looked to them for examples. So, come to think of it, how did the Romans calculate and collect their taxes? Did they have a form MXL or MIC-DIV?
"The Roman economy", writes Richard Duncan-Jones in The Economy of the Roman Empire - Quantitative Studies, "remained a primitive system which would today qualify the Roman Empire for recognition as a 'developing' country" (p1). That did not mean the Roman state (res publica, from which we get republic) was any less creative in finding ways of wringing money out of its citizens. Basic property tax rates were in the range 5-10%, though in some parts of the Empire they could be as high as 20%. Private property owners in Italy were tax exempt - lucky Italians. There were customs duties on trade and a death tax of 5% (increased to 10% under Caracalla).
Collecting the tax was privatised in 123BCE by Gaius Gracchus of Gracchi brothers fame. The Roman state outsourced the collection of taxes to contractors or tax farmers (publicani) who bid for the right to collect taxes (1). These individuals or groups paid the taxes for a certain area and for a certain period of time, and then attempted to cover their outlay by collecting money or saleable goods from the people within that area.
"These payments were, in effect, loans to the state and Rome was required to pay interest back to the Publicani. As an offset, the Publicani had the individual responsibility of converting properties and goods collected into coinage, alleviating this hardship from the treasury. In the end, the collectors would keep anything in excess of what they bid plus the interest due from the treasury; with the risk being that they might not collect as much as they originally bid." (2)
The system was set up primarily to increase the efficiency of tax collection within the City itself but the system quickly spread to the provinces. The system was widely abused, and reforms were enacted by Augustus and later Diocletian.
"Tax farming was replaced by direct taxation early in the Empire and each province was required to pay a wealth tax of about 1% and a flat poll tax on each adult. This new procedure, of course, required regular census taking to evaluate the taxable number of people and their income/wealth status. Taxation in this environment switched mainly from one of owned property and wealth to that of an income tax. As a result, the taxable yield varied greatly based on economic conditions, but theoretically, the process was fairer and less open to corruption (2).
To establish the value of the taxable base, every five years, each male Roman citizen had to register for the census. In this he had to declare his family, wife, children, slaves and riches. The process was overseen officials called censors.
Modern commentators have looked to the Roman experience for clues as to the best way to run an economy. No less an organ than the Journal of the Cato Institute in an article 'How Excessive Government Killed Ancient Rome', Bruce Bartlett concluded:
"The fall of Rome was fundamentally due to economic deterioration resulting from excessive taxation, inflation, and over-regulation. ... Although the final demise of the Roman Empire in the West (its Eastern half continued on as the Byzantine Empire) was an event of great historical importance, for most Romans it was a relief" (3)
(Relief? Really? "The world just ended, honey, but look on the bright side, we won't have to send in our tax return to Rome next year"). Just to be clear, the Cato Institute (not named after the Roman Cato The Younger, but the series of newspaper articles published as 'Cato's Letters' written by two Englishmen in London in the 1720s) has as its stated mission
"To broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets and peace. Toward that goal, the Institute strives to achieve greater involvement of the intelligent, concerned lay public in questions of policy and the proper role of government" (4).
("the proper role of government" - got that?).
From the other end of the political spectrum, the oddly-named Roman-Empire-America-Now organisation (stated mission "I want to show you how the wealthy and powerful rip off more and more for themselves, without even thinking about anyone else") summarised:
"More and more of government revenues come from the poor and middle class, less and less comes from the corporate elite. In other words, our revenue system is beginning, in its effects, to look more like the one that prevailed in the late Roman Empire of the fifth century. We haven't gotten there yet, but we will, if the selfish class gets their way" (5).
("Selfish class" - got that? I don't think these guys like government either). Plus ça change.
So you can't please everybody, even if they read the same history books, it seems. We may not like the fact we pay taxes at all, or just the amount we pay, but I am sure I am better off working with the state-run IRS today than some profit-driven Roman privateer publicanus 2,000 years ago.
Now where did I put that tax credit statement?
References
Duncan-Jones, Richard The Economy of the Roman Empire - Quantitative Studies, Second Edition, Cambridge University Press (1982)
2/12/2007 6:49 PM
Sue Hulme-Lowe wrote:
Cheers Lindsay! I enjoyed your site tremendously. Taxes are not quite as chilling as Minnesotan weather, but they come a close second. Still, we cope with both - needs must when the devil drives! Hope to see you soon. Sue. Reply to this
8/5/2007 10:09 PM
Lindsay Powell wrote:
Thank you for your kind comment - please come back and often. Through the blog I offer my take on contemporary events through the prism of history, in particular drawing examples and parallels from the Roman world. Reply to this
