Taxes Through the Ages

Taxes are what we pay for a civilized society. – Oliver Wendell Holmes Jr.

Taxes have been levied on citizens by governments since antiquity. At best, taxes have been regarded as fuel for the engine of civilization, and at worst, as depredations that have ignited revolts and uprisings.

Ancient times

The earliest known tax records were discovered in modern-day Iraq on clay tablets dating from approximately 6,000 years B.C.

In ancient Egypt, tax collectors were known as scribes. As revered members of the royal court, they were exempt from taxation, military services, and manual labor. Until the Persian Period, Egypt was a barter-based economy, and taxes were therefore paid in produce, merchandise, or property.

Ancient Greece imposed a wartime tax known as eisphora, but rescinded these taxes during peacetime. In the Greek city-state of Athens, where the world’s first democracy was founded, Athenians imposed a monthly poll tax on outsiders of one drachma for men and a half drachma for women.

Caesar Augustus is considered by historians to have been the greatest tax strategist of the Roman Empire. Prior to his reign, citizens were plagued by the publicani, mercenary tax collectors of the equestrian class who received contracts from the Senate to collect taxes. Augustus virtually eliminated the publicani and tasked cities with the responsibility for collecting taxes.

Later in the Roman empire as corruption in the central government grew out of control, oppressive tax policies that heavily burdened the average citizen, yet all but excluded the most wealthy, contributed to Rome’s decline and eventual collapse.

In the U.S., because our democracy derives from Greece, early American tax practices and policies most closely resembled those of the Athenian city-state, but in the last century have come to most closely resemble the practices and policies of the later stages of the Roman Empire.

Early taxation was not limited to Western societies. Ancient China also levied taxes on its citizens. Around 600 B.C. the Chinese invoked a type of property tax tantamount to a tribute in which 10 percent of cultivated land and its produce was dedicated to the central government.

Medieval times

During medieval times, fair taxation was a growing issue for English citizens. Most citizens were required to pay a poll tax, and even peasants were forced to pay property taxes on the land they rented and to “donate” 10 percent of their labor or produce to the church. The English folktale of Robin Hood, the heroic figure who “steals from the rich to feed the poor,” arose in part as a criticism of medieval tax practices.

In the Middle East, Muslim conquerors exempted their own citizens from special forms of taxation imposed on nomads, Jews and Christians. The conquered societies who failed to convert to Islam were forced to pay a tax as a tribute to their rulers.

Colonial times

“No taxation without representation” was the battle cry of the American Revolution as colonists successfully fought to free themselves from the taxes imposed by British Parliament. Understandably cautious about taxation, the new country’s constitution all but forbade direct taxation (income tax), necessitating government revenue to be collected via tariffs and duties.

The American Civil War resulted in the government accruing debilitating amounts of debt. Congress passed the Revenue Act of 1861 (the first federal income tax) in order to fund it. Not rescinded for more than a decade, the tax was levied on incomes exceeding $800. It was at this time that the U.S. Internal Revenue Service (IRS) was founded and that tax policies as we know them today first appeared.

Modern times

The Constitution as it was originally written prohibited direct taxes that were not imposed proportionally to each state’s population, and in 1895 the Supreme Court declared unconstitutional a bill that had passed a year earlier seeking to reinstate income tax. Though tax payers rejoiced, they also began expressing growing concerns about the adverse effect that revenue-collecting tariffs and duties were having on the living standards of the poor and on world trade.

In 1913 the 16th Amendment was passed, for the first time legalizing income tax once and for all (the attempt having failed nearly twenty years earlier), though at this time it affected only those earning more than  $3,000 annually (about $75,000 in 2018 as adjusted for inflation).

By 1940, however, aggressive taxation in relation to the U.S. war effort cast a much wider net among the general population as people with incomes as little as $500 annually (about $9,000 today) were subject to tax rates of 23 percent.

By 1945, yearly federal tax collection exceeded $45 billion, up from $9 billion just four years earlier. In 2017, federal tax collection amounted to $3.32 trillion.

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