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History of Taxation

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History of Taxation

The basic principles of taxation are nearly as old as human society—the history of taxes stretches thousands of years into the past. Several ancient civilizations, including the Greeks and Romans, levied taxes on their citizens to pay for military expenses and other public services. Taxation evolved significantly as empires expanded and civilizations become more structured.

Origin of Taxation

“The earliest known tax records, dating from approximately six thousand years B.C., are in the form of clay tablets found in the ancient city-state of Lagash in modern day Iraq,” according to a publication on the Association of Municipal Assessors of New Jersey (AMANJ) website. This early form of taxation was kept to a minimum, except during periods of conflict or hardship.

The Greeks, Egyptians and Romans also enforced tax policies that they used to fund centralized governments. The Greeks levied several types of taxes that are still enforced in many developed countries, including taxes on property and goods. Unlike early Greek taxation, the Roman policies began to weigh heavily on its citizens as the power and corruption of the empire’s central government grew. The excessive tax burden on productive Roman citizens during the 4th and 5th centuries was a leading cause of the nation’s eventual economic collapse5.

Early taxation was not limited to European and Mediterranean civilizations, ancient Chinese societies also levied taxes on their citizens. The Chinese instituted a form of property tax around 600 B.C. that required 10 percent of cultivated land to be dedicated to the central government7. All produce generated from the dedicated portion of land was taken as a tax.

History of Taxes in the Middle Ages

Fair taxation was a key issue for many English citizens during the medieval period. Most citizens were subject to a poll tax, which was a flat tax on every adult in a jurisdiction, as well as property and church taxes. Even peasants that did not own land had to pay property taxes on land that they rented. They were also obligated to donate 10 percent of their labor or produce to the church1.

In 1215, a large portion of the English nobility revolted against their monarch, King John, who had implemented new taxes and increased existing ones to finance his military ambitions in continental Europe. The king levied more taxes to help pay for a large-scale conflict, including hiring a large mercenary force, and to make up for the loss of taxable territories in France during the war8. Many land-owning nobles did not trust King John’s leadership and did not feel responsible for supporting the war effort.

While turmoil and provincial strife dominated European politics, a unified and expansive empire emerged in the Middle East. Muslim conquerors took over a large portion of northern Africa and the Mediterranean region during the 14th and 15th centuries. They ruled over a diverse collection of populations, including nomads, Jews and Christians, which were subject to special forms of taxation that did not apply to Muslim citizens. Stationary societies that did not convert to the beliefs and traditions of Islam had to pay a special tax, which was more akin to tribute, to their rulers6. Muslim officials also taxed nomads by waiting at particular locations, like water supplies, to collect dues from the elusive wandering clans.

History of Taxation During the Colonial Period

Taxation policies developed quickly during the colonial period as wealth began to flow into Europe from colonies in Africa, Asia and the Americas. Great Britain enforced the first general income tax in 1799 to help finance their war against Napoleonic France3. This tax was also scaled according to income, much like the income taxes levied in most modern systems.

The dispute between the American colonists and the English crown that eventually led to the American Revolution is partially attributed to disputes concerning fair taxation. The colonist’s main grievance with the tax policy was distilled into a simple phrase, “No taxation without representation.” While the colonists were forced to pay taxes to England, including hefty duties on staples like tea and stamps, they did not receive any direct representation in Parliament or in the monarch’s court.

Recent Tax History

When the United States was founded, the federal government levied relatively few taxes. The country did not maintain a significant military force during times of peace. Instead, it relied on local militiamen for protection from marauders and local rebellions. The central government was also much smaller than it is now, and required much less money to maintain. As the new country developed, it encountered several crises and conflicts that prompted changes to the tax code.

The first federal income tax in the United States was created shortly after the Civil War to pay for the debts accrued during the costly internal conflict. The tax was not universal; it only applied to citizens above a certain income level4. This federal income tax was repealed in the 1870s, but a later administration created new federal tax legislation in 1894.

Many European nations also adopted income taxes during the 19th century. The unifying Prussian influence over many of the independent German states helped entrench the principles of income tax in continental Europe. France began to levy an income tax during World War 1, in response to the threat of a German invasion3.

References:

  1. Association of Municipal Assessors of New Jersey: “A Brief History of Property Tax.” Richard Henry Carlson. September 2004. http://www.amanj.org/files/Carlson.pdf
  2. Inter-American Center of Tax Administrations: “Taxes in Ancient Greece.” http://www.ciat.org/index.php/en/news/archived-news/news/1145-los-impuestos-en-la-antigua-grecia.html
  3. Encyclopedia Britannica: “Income Tax: History of Individual Income Taxation.” http://www.britannica.com/EBchecked/topic/284849/income-tax/71953/History-of-individual-income-taxation
  4. Internal Revenue Service: “Understanding Taxes.” http://www.irs.gov/app/understandingTaxes/teacher/whys_thm02_les03.jsp
  5. The Cato Journal, Volume 14 Number 2: “How Excessive Government Killed Ancient Rome.” Bruce Bartlett. Fall 1994. http://www.cato.org/pubs/journal/cjv14n2-7.html
  6. Fordham University. Princeton University Press: “The Early Islamic Conquests.” Fred Donner. 1981 http://www.fordham.edu/halsall/med/donner.html
  7. Authorama: “Ancient China Simplified, Chapter XVI – Land and People.” Edward Harper Parker. http://www.authorama.com/ancient-china-simplified-17.html
  8. Constitutional Rights Foundation: “Meeting at Runnymede, the Story of King John and Magna Carta.” 2001 http://www.crf-usa.org/foundations-of-our-constitution/magna-carta.html

About Quentin


Quentin is a freelance journalist, researcher and copy writer. His published compositions include feature journalism, for print and online outlets, as well as research-driven articles and e-books.

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Quentin

Quentin is a freelance journalist, researcher and copy writer. His published compositions include feature journalism, for print and online outlets, as well as research-driven articles and e-books.

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History of Taxation