Wide-ranging historical survey looking at major world civilizations through the lens of taxation and tax policy. It's a good read, a great review of world history, and it gets you to think about that history in a refreshingly unusual way.
I've said elsewhere that one cannot understand history properly without some grounding in monetary history. Add tax history to the list! The author makes a robust argument that many if not most political instabilities and revolutions largely emerge out of resistance to punitive taxation.
Likewise, this book will help deprogram readers away from the many schoolbook historical narratives we carry around, like the hypersimplified "Just say slavery" narrative of the American Civil War, or the pro-government narrative of the Whiskey Rebellion as "Federal law and order prevailed over frontier tax cheats."
It is a surprisingly sentimental and romantic intellectual experience to hear the author describe bygone eras like the "Greek peak" era of Athenian democracy, or republic-era Rome, teaching readers all the things these societies did right to thrive: government and public service jobs paid nothing, tax policy was mild and tax rates were low, and the wealthiest citizens would step in and voluntarily donate money to support major public works. At the same time, however, it becomes a bit depressing to look at the modern high-tax surveillance economy, particularly in countries like France and Italy where government spending exceeds 50% of GDP, a shocking level. As the author puts it: "It is not necessary to curtail public programs and services; what is necessary is the curtailment of the spirit of gain and profit that infects public servants and contractors."
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The author occasionally verges into man-with-a-hammer hypothesizing: see for example where he speculates that during the pre-Exodus period, when the Jews were still peacefully settled in Egyptian territory, the Pharaoh (somehow) used taxation to force the Jewish people into slavery. It's certainly possible, but the author gives no actual evidence for this, mainly because there isn't all that much evidence of anything from this era.
One of the author's primary recommendations, and it's a good one, is to separate a government's power to tax from its power to spend. We have a lot of pride in the US system of "separation of powers," but the author claims one major whiff in the modern structure of the US government is that Congress has the power to both tax and spend, and this money power is what inevitably leads to centralization, power concentration--and eventually, surveillance and control. The author cites Switzerland as an example of how to do things better: the Swiss place all tax bills directly to the people in referendum form. Unsurprisingly, most of them are struck down, and thus Swiss government tends to be about as lean and efficient as a government can get.
Also: you will come away from this book with an insanely long reading list of books to explore on historical eras old and new. See the "To Read" section at the very bottom of this post.
One final thought, and it comes from one of the author's refrains throughout the book: that "liberty contains within it the seeds of its own destruction." It's easy, really easy, to get down and discouraged when you think of all the past peak civilizations that gradually fell into tyranny, repeating an endless cycle of slowly surrendering liberty to a government that gradually, then suddenly, became despotic. We in the modern era see our own civilizations decaying all around us, and the more you learn about history, the more you learn that there is little than can be done about these grand civilizational cycles of waxing and waning liberty (usually waning). Liberty never lasts. Perhaps we were lucky to have what little we got.
[Readers, what follows are my notes and quotes from the text: I write these out in order to collect my thoughts and better remember what I read. Please feel free to skim or skip.]
Notes:
Forward by Alvin Rabushka
xiff Positive comments here on Charles Adam's previous book Fight, Flight, Fraud: The Story of Taxation, which Rabushka puts on the top of any reading list on the subject. "The origins of recorded history were inextricably linked to oppressive taxation"; see the clay cuneiform tablets from Sumer showing that the Sumerians had more to fear than their tax collectors than from their Kings; the Rosetta Stone was in fact a grant of tax immunity; on the island of Rhodes, which lost 85% of its trade after Rome undercut Rhodes' 2% harbor tax with their own tax-free port on the island of Delos; then Rome itself fell, not to the Huns, but to tax evasion as wealthy landowners devised schemes to escape taxes.
On how Adam's adds to his prior work with several new chapters on ancient civilizations, the Greek and Roman eras, the Middle ages, Western and Eastern Europe, the Aztecs, American taxation as well as the miracle economies of Asia, which used supply-side economics long before Reagan popularized the term. Also commentary on US state constitutions and rules like California's Prop 13 which limits property tax rates to 1% of a home's value.
xii Comments on the author's idea of changing tax regimes from direct taxation to indirect taxation to minimize the intrusive power of the government into individuals' private affairs; also to eliminate the complexities of the US tax system with a 10% flat tax without any exemptions; this is based on long history of countries like Israel, Rome, Greece and ancient China [note also several of the former Soviet republics successfully used a 10% flat tax to massively boost tax revenues]. Finally, conclusions from the author: 1) that good tax systems go bad unless citizens can restrain their governments "which have a normal propensity to adjust their spending to their innate voracious appetites."; 2) that civilization tends to self-destruct from excessive taxation; and 3) comments on the importance of moderation, including the choice of tax rates as well as penalties, as well as avoiding severe progressivity or regressivity in the tax code in order to treat taxpayers equally.
Preface
xvff The author here talks about how this book came from 20 years of experience as a tax professional plus a few years of teaching history, where he recognized the important role of taxation in many historical eras; at the same time he noted that taxation had rarely been studied on its own as a force shaping history. [This sounds just like monetary history: historians don't study monetary history at all, thus they don't realized how huge a driver it is in events.] Also comments here on the necessity of digression: "the ancient historians were masters of the art of digression which is what makes them exciting to read..."
Introduction
xvii On the idea of the taxes are a prime mover of history: the author says this has more merit than many of the other theories of history, some of which are frankly "crackpot" (e.g., class struggle or great heroes). "There have been great and powerful men who have moved civilization, but most of the time no heroes can be found, and the world is led by scoundrels, fools, and second stringers. Leaders like Moses don't show up very often, especially when needed. Taxes, however, are ever present, often making a strong impact on our lives--for good and evil."
xviiff "Angry taxpayers can be a lethal threat to a government that institutes oppressive taxation. Taxpayers instinctively rebel: the first warning phase of rebellion is rampant tax evasion and flight to avoid tax; the second phase produces riots; and the third phase is violence." Interesting comment here on how in modern times, tax makers use "synthetic felonies" to terrorize taxpayers. Comments here on dumb taxes that undermine or destroy the social order rather than enhance the strength and prosperity of the people; the author wants to clarify that he's using a more complex meaning of the word "dumb" like lacking an essential quality, like a barge would be a "dumb ship." Also comments on how our rebelliousness today is "embarrassingly mild" compared to the past, we have a great fear of the tax man while our ancestors had "malice aforethought." Also on comments like words like liberty and freedom came from ancient peoples as terms used to describe a city's tax status.
xix Comments here that the tax issues behind Southern secession are seldom mentioned. [You have prompt Google AI to set aside the standard "winners write the history books" narratives on the US Civil War, but once you do, it's quite shocking to see a range of tax issues that were at play here, for example southern anger at tariffs to protect Northern industry (which harmed southern commodity exports because of the response from Europe taxing/tariffing those exports on arrival).]
Part I: Taxes: What They Are and Where They Began
1ff Comments on how we see taxation is a type of analogy for robbery; that taxes are not debts, a tax is owed simply because the government orders it to be paid, thus it is a "taking" without payment; how taxes are the fuel to make civilization run, no known civilization did not tax semicolon; note that 6,000 years ago in Sumer the people of Lagash instituted heavy taxation during a war but when the war ended the tax men refused to give up their taxing powers; the story ends when a good king established the freedom of the people and once again there were no tax collectors; the author notes that shortly thereafter the city was destroyed by foreign invaders.
3 Comments here on modern computers have little over the all-incompassing surveillance of Egypt's scribes; our modern sense of tax justice lags behind the Romans idea of it [at least the Roman republic era's ideas of it, as we'll see Rome became rather unethical in its taxation later in its later years]; revenue sharing was developed by the Greeks; on the paradox that taxes can are like fire in that they can be a danger to civilization but also can build great nations and bring much good to people. "Life at all levels was first and foremost a tax struggle. Here is the story."
Chapter 1: Ancient Egypt: The Ubiquitous Scribes
5ff Comments here on how Egypt entered a long decline after making certain tax changes; how the reputation of Egypt is the land of Pharaohs and slaves, but in reality workers were not in bondage for much of its history: "the first recorded strike in history was instituted by Egyptians protesting the late delivery of their pay." On the tax collectors who were called scribes, and who ran the society with iron-fisted control; on the annual audit; how the scribes had their own tax courts and a taxpayer was not even permitted to have an attorney to present his side; everything was taxed, from slaves, to sales to foreigners, to exports and imports, ag production was taxed at 20%, including any kind of harvest, not just farming but home gardens too; most of the agricultural land was owned by the state and leased and taxed based on what production should be, not actual production; thus the tax was based on the amount of land given to the farmer.
8ff Comments on how there were scribes in the field to keep the tax collecting scribers under surveillance to limit corruption. Comments about the pharaoh Haremhab who succeeded to Tutankhamen, Haremhab discovered deep-rooted corruption among his special agents, who had been sharing tax money with the scribes in the field who they were supposed to be watching.
10ff Comments on tribute: the author believes that it started out in earliest history as a wise tax, but in periods around 1,000 BC it became brutal and oppressive; the author argues that most taxes repeat this arc from going good to going bad; see the Spanish Empire collapsing after it turned its excise tax into a crippling exaction; likewise on the income tax, which the author believes started out as a smart tax in the 19th century. Comments about Judea living under Egyptian suzerainty and being taxed aggressively by the scribes.
11 Comments on Akhenaten, who presided over the demise of Egypt and was replaced by foreign rule for the next thousand years as his tax base was cut in half. He lost the tribute territories in Syria and Palestine as the Hittite empire took over for reasons no one knows; he basically stopped showing force to his various subject territories and the Hittittes were able to take advantage of the resultant power vacuum.
13 Interesting comments hear about tax immunity given to temples and priests, to the point where a third of all the lands of Egypt were owned by the temples and were tax-free. The author says that this eventually laid the way for the tyranny of the Amon priesthood which was the in the end was the death of Egypt. The author talks about how tax immunity for religion shows up in the struggles between popes and kings in the Middle Ages, fighting over the immunity of the church from taxes. Also comments on a form of proto-asylum available to people fleeing from their government and from taxes, by receiving protection on temple lands and buildings that were places of refuge; this lives on today in diplomatic relations among nations. Final comments here on informers, corrupt revenue officials, and an all-pervading surveillance system, where privacy gives way to the taxing system, and how this rhymes with our modern tax system which is basically the same using the same means: "The tools have changed, not the system." The author cites the 1975 Supreme Court ruling that federal tax agents can snoop into just about anything using John Doe summons. Finally the author quotes an IRS agent writing under a pseudonym: "There is no important piece of information concerning you I am forbidden to seek."
Chapter 2: The Rosetta Stone Speaks--And Tells a Tale of Taxes
18ff On the Rosetta Stone with a message in hieroglyphic, demotic, and Greek, inscribed in 200 BC during Ptolemy V's reign, during a period of civil war, as soldiers returning from military campaigns in the east rebelled from new tax burdens; the message offered amnesty, tax immunity for temples, it freed tax debtors and rebels from prison, and forgave their tax debts. The author calls it "a capitulation on the part of government." Also there's reason to believe that many copies of this stone were carved and installed in temples because this peace proclamation was a road to tax-free riches for the priesthood, which previously had lost their ancient tax immunity. Essentially this was a "no trespassing" sign in front of temples for the tax collectors!
21 "A large percentage of all ancient documents are tax records of one kind or another... How people were taxed, who was taxed, and what was taxed tell more about a society than anything else."
21-2 "Rulers do not reduce taxes to be kind. Expediency and greed create high taxation, and normally it takes an impending catastrophe to bring it down. The proclamation of peace referred to in the Rosetta Stone means that the pressures of excessive taxation were destroying Egypt. The accumulation of unpaid taxes must have reached an intolerable level... In short, the grants of tax immunity set down in the Rosetta Stone paint a pitiful picture of Egypt and indicate that her rulers were driven to take desperate measures to end the social and economic chaos their excessive tax system had created. There are numerous other writings of this period that confirmed this interpretation."
23ff "Peace proclamations like those in the Rosetta Stone were repeated at least three times in the next century. The success of the Rosetta Stone proclamation prompted the government to use tax amnesties as a regular medicine to check civil disorder." Comments here on the Russian scholar Rostovtzeff, who believed that "the decay in Egyptian society was the result of lawlessness in the bureaucracy, especially the tax bureau. The king could not restrain it, and his orders went unheeded." This led to a decline in incentives, businessman moved away, lands fell into disuse, workers fled, and inflation destroyed what capital there was as sound money disappeared. Ultimately in 30 BC Octavian entered Alexandria, beginning Roman rule after the defeat of Marc Anthony and Cleopatra. [Also note the interesting comments about Greek bureaucracy, this country was run by a foreign elite and it surely weakened as a result of that as well.]
24ff Finally note this comment quoting Herod Agrippa, speaking to the Jewish people, urging them to be obedient to Romans tax demands by appealing to the example of Egypt. And then a last comment here on when Muslim armies arrived in the 7th century, it was easy for them to take over Egypt, "for they offered the overtaxed Egyptians not just reduced taxation but no taxation if they would embrace Islam."
Chapter 3: The Age of Terror-Taxation--and the Indomitable Tax Rebels of Ancient Israel
27ff "Setting aside the religious aspect of Jewish history, their economic and political story has been one continuous struggle after another against outrageous taxation." The author describes three main periods: 1) the Kingdom of Israel, 2) Judah Stands Alone, and 3) The Scattered People. Comments here also on Hitler's special Jewish taxes "which completely destroyed Jewish power in Germany." On the Jews going from "a highly respected colony of foreigners living in Egypt" to bondage; the biblical account does not explain how they were enslaved; the author cites Josephus, the Jewish historian, saying that the Egyptians were "touched with envy at their prosperity." The author's hypothesis is that the pharaoh used his power to tax, putting some sort of tribute or burden onto the Hebrews, taking an unpopular wealthy class and taxing them into oblivion or rebellion.
30ff Discussion of Solomon and the yoke that he put on the Hebrew people to pay for all of his "wives and glory"; his son Rehoboam when he received the throne was asked by tribal leaders to repudiate some of the heavy taxes Solomon had put upon them, but Rehoboam actually increased taxes. "A well-organized tax revolt erupted on the spot" Rehoboam was told he could not be king, and also it was decreed that no descendant of David would ever be allowed to rule; and then the people actually stoned Rehoboam's chief tax collector. [!] Rehoboam then fled to Jerusalem and the kingdom split, with Rehoboam only ruling the small province of Judah which paid tribute to Israel and its non-Davidic kings.
31ff On Israel's place as a buffer state between Assyria and Egypt, paying taxes and tribute but remaining neutral because an alliance with either side could invite annihilation; the prophets advocated strict neutrality. On the periodic rebellions of Israel against the Assyrians; periodically Assyria had to subdue Israel, see for example 750B C where Assyria subdued Israel and compelled 15 years of tribute; a rebellion again follower and in 734 BC Assyria crushed Israel and took almost all the Israelites captive, leaving a small remnant in Samaria. And then in 721 BC, once again the Assyrians captured Samaria and led all the remaining Jews into captivity, making the "Lost Tribes of Israel" truly lost. "As a matter of historical fact, the Lost Tribes vanished as the result of a courageous but unsuccessful rebellion against unjust taxation." The smaller kingdom of Judah, under Hezekiah, obeyed Assyrian demands after the obliteration of Israel, but then eventually they rebelled too. The Assyrians came and conquered all of Judah but Jerusalem was saved following the prophecy of Isaiah.
34ff On Babylon, which replaced Assyria as the superpower of the east in 612 BC under Nebuchadnezzar; when he arrived in Judah the Hebrew king offered to pay tribute, but then four years later the Jews revolted again, although when facing Nebuchadnezzar's army they sued for peace, paid their taxes and entered into a tax treaty with the Babylonians; Nebuchadnezzar then selected a new Jewish king, Zedekiah, but eight years later Zedekiah renounced this tax treaty with Babylon; Nebuchadnezzar then lost all patience with the Jews, attacked and destroyed Jerusalem, had Zedekiah's sons were killed in front of him, Zedekiah's eyes were put out, and the people were taken back to Babylon into captivity, where they eventually prospered until a Persian king, Cyrus the Great, allowed them to return to Jerusalem. [The author makes an interesting comment here, that "the wild frontier of Judah was not as appealing as the cultured life in Babylon--not unlike American Jews who have no desire to return to Israel today with its wars, struggles, and socialism."
37 Also the author argues that Cyrus was astute enough to realize if he could induce the Jews to rebuild Jerusalem he could add a thriving tax revenue source to his realm.
37 "Today we remember ancient Israel for the Scriptures, for faith in God, and for religion devoid of idolatry. Should we not also remember them for their indomitable spirit against unjust taxation?"
Chapter 4: Israel's Final Hour: From Hanukkah's Glory to Goliath's Triumph
39ff "Jewish readers may be surprised to learn that the origins of Hanukkah are rooted in the tax struggles of the ancient Hebrews." After Alexander the Great's death, his rival generals carved up his empire and Judah once again became a buffer state between two rival powers. [Here the author means the Greek-run Ptolemaic Empire and the Seleucid Empire.] The Greeks actually kept taxes unchanged at 33% for sown crops and 50% for orchards and vineyards--"oppressive by any standard." Jews prepared a Greek translation of their scriptures that has survived to this day, Ptolemy in appreciation freed Jewish slaves in Egypt, paying for their freedom out of his Treasury; then, the Jews came to the aid of the Seleucid king Antiochus in a defeat of the Egyptians, Antiochus granted the Jews tax immunity for three years and harvest taxes were canceled for seven years, then after the immunity period all taxes would be reduced by a third. But then, however, the Jews lost their tax immunity when Antiochus's daughter Cleopatra married Ptolemy following a peace treaty, and Antiochus gave Judah to Ptolemy as a wedding present.
40ff Complicated story here about how Joseph, the high priest's nephew under Judah's king Onias, contrived to obtain control of lucrative tax farming operations through Syria and Palestine to pay Ptolemy's taxes out of the profits.
41ff Now to the Hanukkah story, which occurs a generation later, after the Greeks recaptured Judah from Ptolemy; the Jews found themselves again paying taxes again to Antiochus, ultimately resulting in a rebellion united by a militant family, the Maccabees, who ultimately expelled the Greeks from the kingdom of Judah, after this they lit the oil in the temple in an eternal flame, and although there was only enough oil in the lamp for one day, it burned for eight days. The Jews then repelled Greek counter-attacks and negotiated a peace treaty where the central issue was taxation; they agreed to 30% tax on sown crops and a 50% tax on orchards and vineyards again. The author discusses how this gave the Jews a false sense of power, that they viewed themselves as a sort of a David-and-Goliath type situation able to slay giant nations, but "Antiochus was no giant" but rather "a lazy tax collector" with mercenary armies that were disintegrating from lack of pay.
43ff Now the final chapter of the ancient Jewish state, when the Romans arrive to Palestine in 64 BC under the general Pompeii, who could see that Judah was on the brink of a civil war; then when he got wind of a revolt from Judah, he returned and laid siege to Jerusalem, put down the rebellion, and made the region, renamed Judea, into a tribute territory, with a Roman ruler to oversee their affairs. The author criticizes the Jewish people's poor statesmanship here where they could have remained allies of the Romans and kept their small empire with even tax-free status. Unfortunately the Jews were not happy with their new leader, not with his son, Herod, who had murdered a number of Hebrews; comments on the murder trial against Herod, the Sanhedrin acquitted him out of fear; Herod continued his murderous ways, ordering the slaughter of all male infants in Bethlehem shortly after the birth of Jesus.
44 On the famous question to Jesus: is it lawful to pay tribute to Caesar? This was a loaded question, for a negative response would have been treasonous, punishable by death.
44ff Judea was seen as a difficult outpost, the dregs of Roman procurators were appointed to the region. The Jews went on strike for a number of years while Herod Agrippa encouraged the Hebrews to pay their tax delinquencies to avert Roman punishment; the strategy worked. On Florus, the Roman procurator, who wanted to seize the gold in the Temple, provoking a riot; on the Jew uniting behind the zealots, driving the Romans out of Judea; this resulted in the Emperor sending his best legions under Titus and Vespasian to deal with what was one of the Roman empire's largest uprisings once and for all. Titus offered to call off the siege on two conditions: that the Jews would accept Roman rule and pay their taxes to Rome. The Jews refused, believing that God would come to their aid, but the Romans breached the walls, basically destroyed everything and this was the end of a Jewish state in Palestine for the next 2,000 years. The land was given to Roman soldiers, turning the Jewish farmers into sharecroppers.
48 "Four times the Jews challenged the Romans over a two-hundred-year period. Each time they lost, not only in battle but also in their freedoms. Each time taxes got worse, and liberties all but disappeared."
Chapter 5: The Ingenious Greek: Tyranny and Taxes
49ff On the Persian king Cyrus in the 6th Century BC, who ruled the entire civilized world, although the Greek mainland was the only area not subject to Persian taxes; and in 490BC the Persian king Darius demanded Greek tribute, and the leading Greek cities Athens and Sparta formed a defense league, united their armies and defeated the Persians at Marathon, leading to the major role of Greek culture ever since.
51ff On the Greek innovation of democracy; on the link between private property and liberty; on the Greek use of indirect taxation, like a harbor tax, sea-lane tax, or taxes on auctions of slaves, real estate, taxes on lodging at inns, or fees for the use of Athenian courts of justice; note also the comments here about the drachma, made of pure silver which made it the most respected currency in the world; the Greeks guarded its value and purity. Also on their view that "direct taxation and tyranny were one."
53 Discussion here of Peisistratus of Athens, who was a shrewd politician who claimed he was a democrat and benefactor of the poor, but actually seized power and became a tyrant, although he used his power with prudence and did not overtax.
54 On the metic tax, a tax on foreigners paid monthly by anyone who did not have both an Athenian mother and father. Also non-citizens could not own land, only citizens could own land, and that land was tax exempt. Also if a metic was found to own land or have evaded poll taxes, his land was confiscated, tax penalties would be levied, and the informer who found him out would get 50% of the tax collection.
54ff On the Athenian wartime emergency tax, used during special wartime situations; the Greeks are one of the few people to have "limited extraordinary taxes to the emergencies that prompted them." The author goes into a discussion of how this was collected: citizens were divided into groups of 100, and three officers would pay the full tax for all members, and then would then collect what they had paid on their behalf. This was a system that tended to keep everyone honest, with prompt collections, and no government bureaucrats were required. Also any booty from the war was used to repay or refund this tax.
57ff On Aristides the Just, an Athenian general appointed to oversee the tax system; he could be called the father of just taxation; also this is the first historical reference to taxation based on due proportion, Plutarch gives an account of Aristides and his tax policy and process, see Plutarch's Lives. Note that Aristides' successors were not so just, and the Delian League evolved into the Athenian League--or more accurately the Athenian Empire--and taxes doubled and then doubled again, and corruption from this easy money was unavoidable; ironically the Athenians became just like the Persians the Greeks had united against. Note also what happened to the island of Melos when it tried to withdraw from the Delian League: the Athenians slaughtered all the men and sold all the women and children into slavery, leaving the island desolate as an example for all the other cities. Eventually Sparta and Athens went to war in the 5th Century BC, the Peloponnesian War, which raged for decades, and civil war continued thereafter and Greece went into terminal decline. Many ancient Greek philosophers and writers saw the defeat of Athens as a judgment of the Gods on Athenian arrogance and imperialism.
Chapter 6: The Ingenious Greek: Public Revenue Without Bureaucracy
61ff On how the Greeks perfected a progressive tax system by taxing commerce and surpluses of farms when they reached channels of trade; subsistence farming was not taxed; also on the idea of the "liturgy," which was a voluntary tax paid by the wealthiest citizens to donate equipment or to fund plays or athletic contests in the city; rich benefactors competed with one another for this honor and most gave more than was asked. "...the city-state was the first love of every citizen" in Athens; the author cites this as a new conception of private property where those who held wealth held it in a kind of voluntary trust for the city.
64ff "This was the Greeks' brilliant alternative to government ownership and bureaucratic control, which typified the Oriental despotisms of that day and the governments of our day." The author contrasts the Greek liturgy to our modern system where there's no spirit of the operation, donors are not respected for their benevolence, no one ever pays more than their tax obligation, versus instances in Greece where people would pay three or four times what was seen as appropriate; also in today's system you don't even know where your money goes. The author compares this to the attitude of Louis XIV: "All the wealth of his subjects was his, and when he took it he took only what belonged to him." "Under a liturgy system there is no place for the games of avoidance and evasion that characterize our tax systems. Loopholes, tax gimmicks, and tax shelters have no place."
65ff The author notes that the liturgy practice survived the city-states but when Romans demanded liturgies from their conquered cities this was no longer constituted a voluntary contribution, it was simply confiscation. Also comments here on how this concept of liturgy could be applied to our modern industrial states: the author suggests having government service pay little or no salary, legislators could serve for a modest wage, the youth could donate a year of public service to essential services of government, etc.
66ff On yet another Greek revenue raising device: tax farming; basically tax farmers were private contractors who would bid at public auctions for the right to collect a certain tax like a harbor tax, hotel tax or a sales tax; the author describes it as an interesting delegation of sovereign power, for the Greeks it was an economical way to collect taxes; later this evolved into far more oppressive systems during the Greek kings era of the third to first century BC; and then was made still more oppressive when the Romans got hold of the system. "What works well in one time and place may bring disaster when misapplied in other circumstances."
69ff Discussion here of how Greek ideals about taxation spread to Rome as Greek tutors were in all the wealthy Roman homes, and as such Romans forbade direct taxation of Roman citizens for some 500 years; up until the 20th century Europe and North America applied Greek ideals on taxation and references to direct taxation can be found in the US and Canadian constitutions. "Debate still rages over whether income tax is a direct or indirect tax."
Part II: The Kaleidoscopic Romans
71ff The author refers to scholars describing Roman taxation as organized robbery, but the author argues that Roman taxation was not always bad: there was a 200-year period at the zenith of Roman civilization when taxes were modest. Also comments on the historical demarcations of Roman civilization: the end of the Republic period in 30 BC, and then the sack of Rome in AD 476, the author breaks Roman taxation into four periods.
Chapter 7: The Early Republic: The Citizens' War-Tax Era
73ff The author hearkens back to the early Roman Republic that required little taxation because it operated with free labor, the army was made up of property owners who served for one year without pay, even providing their own uniforms and equipment; also city magistrates served the city without pay, etc. Note this quote capturing the idealism here: "The ideal way to reduce heavy taxation is to instill in all citizens a spirit of unselfish service for the public good. It is not necessary to curtail public programs and services; what is necessary is the curtailment of the spirit of gain and profit that infects public servants and contractors." Comments on the early tax revenue sources of early Republic-era Rome: customs duties on imports and exports, as well as taxes on slaves sold at auctions and as they arrived in ports.
75 "The king of an eastern Roman province complained to the Senate that he was unable to provide men for the legions because Roman tax-farmers had taken his surplus male subjects and sold them. The story is often cited to prove that Roman tax men operated a vast kidnapping-for-slavery operation in the provinces. This may not be a correct interpretation of the records. The king probably pledged his surplus male subjects to secure a loan to pay his taxes. If the loan was unpaid because of a bad harvest, the tax-farmers foreclosed on their collateral, like any efficient banker."
75ff Comments here on the tributum, is a word applied to many types of payments in Rome, but in this earliest example it refers to a patriotic citizens' war tax; it was a duty of every citizen to come forth and make a declaration of wealth; luxuries like jewels, expensive clothing and fancy carriages were assessed at ten times their value, thus even though the overall rate applied was low (one tenth of one percent) the rich were subject to higher taxes because the base value was exaggerated. The author cites this as another example of a progressive tax. Also the wealthy were subjected to forced loans on top of their basic tax; also there was a refundable element to it paid for by booty from the war. Note that Cicero wrote very contemptuously about this tax, but the author thinks it was effective in the early Rome, probably because of the patriotism of the civilization. Cicero wrote these criticisms much later. The author also asks, "If the tax was so intolerable, why were foreigners exempt?" while also noting that widows and orphans paid this tax too, and their funds were specifically set aside for the cavalry. He argues this tax was not despised at all but paid with pride.
76-7 On the tax censors, who were the most powerful men in the Republic; they had the power to appoint or dismiss senators and their responsibility was to assess the wealth of the citizens; senior statesman were elected to these posts by an assembly of all Roman citizens; the author asks the reader to imagine Winston Churchill as a tax assessor, but "this is where he would have ended his illustrious career" if he had lived in Republican era Rome. These men were widely loved and admired.
77 The author writes that the war tax it was abolished in the second century BC because for the next 400 years Rome could live off of the proceeds from its provinces. Comments on how the Romans solved an inherent weakness in the tribute system: with the Roman provincial system, governors were sent out with dictatorial powers backed up not by the threat of the legions coming to put down any rebellion, but by the fact that there were legions right there--they didn't have to come all the way from Rome; thus the military force would provide "peace and order in a world fraught with danger" in return for tax/tribute payments.
78 Comments on the wealth of the Sicilian colony which was seized by Rome in its war with Carthage, and fed Rome's appetite for more colonies just like it; comments also on the Spain colony which produced gold and silver shipped back to Rome, forming the basis of their monetary system for centuries to come.
Chapter 8: The Publicani Drive the Republic to Ruin
81ff On the second century BC, during which Roman businessman not of aristocratic rank rose to dominate the Roman state using brutal and grotesque exploitation in the colonial regions. The author frames them as "the carperbaggers of the ancient world." On the creation of the decuma, a 10% harvest tax, that replaced the tax treaties of the Roman senate and were to be collected by publicani under five-year contracts, large contracts paid up front that gave the Roman government cash up front which was later recouped by the publicani; the author describes how publicani would pool their funds, and he calls the resulting groups, the societates publicanorum, the world's first corporation. Senators could own shares but they could not participate in management; also shares were sold in the Forum at Rome with excellent yields according to the author. Also on how the government could not get rid of the publicani because government revenues depended on them despite the fact that many, including Cicero and Livy, condemned them.
82 "Throughout history, whenever a tax develops that is productive of revenue, but oppressive to taxpayers (like the income tax), the tax will continue. The financial needs of the state override most constitutional, moral, and cultural ideals."
83ff Interesting story about the rise and fall of the island of Rhodes, which dominated international trade after the fall of Athens in the 4th Century BC, creating a very successful society based on charging a harbor tax on cargo going between the east and west. During the Roman Republic era they were a neutral business center that operated a number of tribute territories on behalf of Rome, also serving as a buffer state between Rome and Persia; but during the conflict between Rome and Philip of Macedonia there was an anti-Roman political group in power at Rhodes that offered to mediate a peace treaty between Rome and Macedonia; this was seen as an act of treachery by Rome from an ally they had richly rewarded, so the Romans responded by setting up a free port on the island of Delos to challenge Rhodes, and they quickly disintermediated all of Rhodes' annual tax receipts, as merchants would traffic their cargo there to avoid a mere 2% tax. This became "history's first tax haven." The next step in the game theory here was interesting as well, as Rhodes declined, their naval power which policed the region declined too, and thus pirates would take over the east, crippling trade and disrupting shipping for everyone; this caused Rome to have to invest their own resources in destroying these pirates.
85ff Comments here on Mithridates, who organized a number of rebellions in Asia Minor and executed thousands of publicani with the help of a variety of different cities in the region; including a massive execution of publicani Romans and pro-Roman Greek businessmen at the Delos; the Roman senate appointed Sulla to quell this rebellion, which took four years; he brought a division of special agents to impose taxes on the revolting cities to recoup the costs of the military action and then some.
86-7 Side story here on the king of Bithynia, who ruled over a his region under tax immunity given by Rome, he also remained loyal to Rome during Mithridates' revolts; when he died he gifted his kingdom to Rome--which the author calls history's worst example of estate planning, because this caused Bithynia to lose its tax immunity.
87 Various examples where the publicani convinced the Roman Senate to renege on various tax immunity treaties so that they could harvest taxes in the east; Cicero condemned this practice, but the senators said that they needed the money and were justified by expediency. Cicero responded "But will people forever incorrigibly see advantage in what is wrong? Governments cannot do without the splendid reputation and good will of their allies. So how can unpopularity and infamy possibly be to their advantage?" The author compares the Roman senate and its habit of breaching treaties with today's USA.
88 On a Roman governor in Asia named Gabinius, who saw that the publicani had begun subcontracting tax collection to others who would then collect the tax and pay it to the publicani who would then pay it to Rome, retaining a profit as a middlemen; Gabinius is realized that the publicani actually weren't necessary anymore, and he began canceling pubicani contracts with cities in his region and negotiating direct tax contracts himself.
88ff On the death of the Roman Republic, which occurred in the great civil wars that erupted after Sulla's reign; on how democracies and republics would not play a dominant role in civilization until the 19th century, nearly 2,000 years later. On Pompey and Julius Caesar who followed after Sulla; Pompeii instituted heavy taxation to finance his armies as he was sent to the east to the defeat pirates who had seized control of Rhodes after its decline. Pompeii would simply seize publicani money whenever he needed it even, if it was directed back to the Roman senate. Julius Caesar had a more modest taxation approach, copied from Gabinius, where he would purchase loyalty with reduced taxes and refunds; his tax terms were flexible if the harvest was poor. "For the first time in over 150 years Rome's relations with her rich eastern provinces were peaceful" until Caesar's assassination; after this, "Brutus went from city to city seizing everything he could lay his hands on," repeating Sulla's hearse methods of seizure. "Mark Antony was even worse," according to the author: he Greece of money, slaves, livestock and grain, doubling the tax for any city that had supported Brutus. "When the Battle of Actium was over, the victorious Octavian went to Greece to establish his authority. He was so aghast at the pitiful state of the people that he gave them all of the grain he had on reserve for his military forces." Final comments here on how "representative government passed away. Caesars would rule for the next fifteen hundred years."
Chapter 9: Augustus: Master Tax Strategist
91 "If we were to try to select the most outstanding Roman of all time, Caesar Augustus would be a likely choice... The political achievements of Augustus, as well as his lasting peace, were products of his astute management of taxation. Augustus may have been the most brilliant tax strategist of all time."
91 "Perhaps the period of Pax Augustus is support for Aristotle's observation that the best form of government is the absolute monarchy, where are the monarch is wise and just."
93ff "The riddle of why the Senate declined and how the Republic died is solved by the answer to the question of who controlled the tax money. The Senate's revenue wells dried up in the civil war... Until recently we did not know how Augustus cut off the cash flow to the senate... The main reason Caesar eliminated the publicani in the east was not to please a colonial people but rather to seize the Senate's money. Under the auction contract, the publicani were responsible to the Senate; Caesar was responsible to no one once the publicani were removed." Comments here on how the government under Caesar as dictator could negotiate its own contracts with provincial cities and appoint new people as conductores to handle tax collection, replacing the publicani, for a commission.
94ff To develop a more uniform tax system, a great census was taken which is recorded in the New Testament; the author argues this was a decentralization of the tax system that would be administered by local people, the census let the Roman government know how much wealth and how many people were in the Empire, and then with that information Rome could make a more equitable assessment against each city and leave the collection methods for local administration. Cities and regions, glad to be rid of the publicani were willing to work with the Roman state in collecting the taxes. The author says that decentralization took place on a various levels such that local city governments would now handle most problems in a local populace, not just taxation.
95 On the imposition of an inheritance tax to pay retirement funds for the military, the author claims that modern inheritance tax laws are derived from the system of Augustus, with exemptions or reduced rates for gifts to children and spouses.
97ff On some of the reforms of Nero: he made tax regulations public instead of confidential; merchant ships would be exempt from property tax exemptions assessments; comments on other reforms over Rome's history to their tax system (which frequently malfunctioned) including the recurring policy to crack down on errant tax collectors and their abuses.
98 Carious examples of frequent tax moratoriums and adjustments to taxes after poor harvests; this was often as a safety valve for maintaining taxpayer contentment; examples given here of abusive tax collectors who were crucified on the very spot of their misdeed. "The revolts under Mithridates had taught the Romans that angry taxpayers were a greater threat to peace than the barbarians of the north." Also mention here of 118 AD when Hadrian canceled all taxes, as well as Marcus Aurelius likewise canceling taxes fifty years later.
99ff Comments here on Boadicea, who led a tremendous revolt in AD 60 in the British isles, seizing London, slaughtering every Roman soldier for 100 miles; the author quotes her saying, "Have we not been robbed entirely of most of our greatest possessions, while for those that remain we pay taxes? Besides pasturing and tilling for them all our other possessions, do we not pay yearly tribute for our very bodies? How much better it would be to have been sold to masters once and for all than possessing empty titles of freedom, to have to ransom ourselves every year? How much better to have been slain than to go about with a tax on our heads!" The author comments that after Boadicea's defeat, rather than make reprisals, Nero set up a commission to study and eliminate the corruption of the Roman administrators there, and Britain then settled down to a long quiet period under Roman rule. The author then describes a tax revolt in France ten years later that was also triggered by corrupt Roman administrators, in this case also there were no reprisals from Rome; rather the Roman policy was one of conciliation with the rebellious taxpayers.
100ff Finally on Marcus Aurelius, who presided over the end of the great era of Roman peace; when the empire's treasury was bare he actually auctioned off his own vast personal fortune rather than raising taxes. He "saw taxation as the root of Rome's troubles." "When he made peace with the tribes along the Danube he did the absolutely unprecedented: he granted them immunity from Roman taxation." Final comments here on Marcus Aurelius's tragic error of choosing his successor Commodus, "confirming the Japanese proverb, 'great men have no seed.'" After Commodus was murdered by one of his advisors Rome fell under military anarchy for the next century.
Chapter 10: Diocletian's New Order
103ff On how Rome's second century decline accelerated into the real collapse in the third century, "when the government in Rome accelerated its policy of devaluing the currency to the point where the Roman denarius became practically worthless." The author writes here that the denarius used to be pure silver, by 210 AD it was 50% silver, and 60 years later it was 5% silver; thus there was a hyperinflation effectively and this upended the tax system of of Augustus which was based on a stable currency; a hodgepodge of revenue devices took its place: the "gold crown" which was basically a requirement that the emperor would make to various cities for certain amount of gold coins when it needed revenue; the Roman "liturgy" which enforced a tax payment from each city, and then the inheritance tax, the author cites emperor Caracalla, who in 212 AD granted Roman citizenship to all so they would come under Augustus's inheritance tax law: this rate was raised to 10% with no exemptions; a final revenue device cited by the author here is simply military requisitions, which were arbitrary "taxation" of whatever was available when the army had a need for something. These were all basically inflation-proof revenue collections. [Note that things like capital gains taxes or estate taxes actually wick away wealth via the mechanism of taxing inflation/phantom gains, when an asset value goes up due to inflation but not in real terms.]
105ff On Diocletian, who reorganized the empire and restored order to Rome, but also centralized and nationalized the state; als many private assets were nationalized. "Roman citizenship after eight hundred years was to finally lose its liberties--not to an alien power, but to the very government that was supposed to protect it." Basically he could get away with it, because the empire was in a state of near-complete disorder, collapsing from a worthless currency, with soldiers refusing to accept debased coinage, and tax collectors refuse to accept it as payment, law and order broke down, etc.
106ff Hilarious comments here on Diocletian "ordering prices to remain stable under penalty of death" but prices kept rising in spite of his orders. [!] He then pivoted, having the state accept payment in wheat, barley, meat, oil, wine and various other commodities, basically taxation in kind. Collections would also be made from Romans living in Italy, who would lose their freedom from direct taxation, something they had enjoyed for almost 500 years. Diocletian took a huge census and valued farm operations based on what a farm should produce rather than what it did. Eventually all kinds of variables and adjustments developed in this tax plan and so this fairly simple tax idea turned into a Frankenstein monster when it came into contact with reality, and this gave rise to a monstrous bureaucracy. Over farmers began abandoning their farms, to the point where freedom of movement actually had to be suspended, yet another right of all Roman citizens (the right to move about the Empire as they desired) was abrogated. "Totalitarianism was the final order of Diocletian's new order for Roman farmers. This is not unusual. In time the reader will discover that civil liberties are adjusted to a tax system; the tax system is not adjusted to civil liberties."
109ff The author moves on to Constantine, who, while bringing Christianity to the Roman world, "may also have given the world the first income tax on commerce." Comments here about Gibbon and his writings on the Roman Empire, on his indirect references to how land taxes could be obtained by seizure of property, but commerce taxes based on people's services probably were "seized" as taxpayers were forced to sell their children into slavery or under the threat of torture or imprisonment. "Constantine is reputed to have prohibited the use of torture for tax collection, which suggests that the practice was not uncommon." Instead, Constantine proposed a "spacious and airy prison as a place of confinement" thus instituting the first record of imprisonment for tax evasion, likely it was a type of home confinement. Also: "Many Christian martyrs executed during this period may have died for tax rather than religious crimes." The author cites decrees punishing Christians containing language like "we ordain that their property be confiscated to our treasury" for example. Also there was a tax for draft avoidance, this was payable in gold, which meant only the wealthy could afford draft avoidance.
110 See also how Constantine seized all the gold in the pagan temples in the empire, melted it down for coinage and then put Rome on a gold standard. [!!!] Finally comments here on how the bondage of farmers was finally extended to workers and artisans as well; for example a cobbler and all his descendants were to make shoes forever; this final product was essentially the enslavement of Rome's economic classes, they became essentially economic castes in order to make the tax system work.
Chapter 11: Rome Falls: Was It Tax Evasion?
111ff Discussion here on how there's a zillion "reasons" for the decline and fall of Rome: too much wealth, class warfare, poor generals, inflexible barbarians, etc.
113 "To the list of 'causes' of the demise of Rome, one more subject must be added: tax evasion. The immediate cause of the fall of Rome to the Vandals was a rampant and uncontrolled tax evasion within the Roman state. If the Roman government had at that time had sufficient revenues to maintain an adequate military force, the marauding band of barbarians would not have been able to enter the Italian peninsula, let alone sack Rome. The city of Rome fell because it could not defend itself even against a third-class military force." Comments on the brutality of Diocletians' tax system; how small farmers found themselves better off if they transferred their land to the nearest military chief or large landowner; they could rid themselves of a dangerous tax obligation and be better off, even though they were tied to the land. They could live in the same house, farm the same land, use the same animals, only the tax picture had changed. But then the largest and wealthiest landowners would stall the tax collectors, use their influence to lobby for tax amnesty through the Senate, also note that during this period various taxes on senators as well as inheritance taxes and sales taxes were abolished (thus the point here is that the tax burden shifted away from wealth/powerful Romans who could lobby for amnesty from it. "Lobbyists for tax avoidance were hard at work tearing down the revenue system."
114ff Also returning to the decurion concept from earlier in Rome's history, where the curia, a community's ten richest men, would be responsible for managing tax collections, over time the role of the curia was expanded to the top one hundred men (decurion), but also their administrative responsibilities grew as well until the burden overall became intolerable; some thus took flight, while the richest decurions could just buy a seat in the Senate and enjoy full tax immunity. Essentially the author describes here a process of increasing wealth capture by the wealthiest citizens who could directly lobby the Senate, leading to a growing class of corrupt senators "whose wealth was based on their ability to abuse the tax system and corrupt political officials." [Hmmm, sounds familar...] Rome then morphed into the collection of gigantic landowners with their own serf populations. "The medieval world was only a step away."
116ff Comments on Emperor Julian, AD 361, who was an exception to this trend as he reduced government spending, discharged masses of government workers, canceled tax immunities and exemptions, and resold land to small poor farmers. "Julian saw Rome's problems as economic and financial, centered in an erroneous policy of excessive spending and taxation." Unfortunately he died early and his successors abandoned his programs.
118 Comments on the decline in quality of the Roman military: misfits were sent to the frontier, the best soldiers usually would stay stationed at home; a 200-year process of the decline in power and moral strength of the legions.
118 "Recently, the tax theory of the fall has become unfashionable among many scholars--perhaps because of our own tolerance for heavy taxation. No one likes to think we are writing our own obituary when we draft modern tax legislation." The author cites a number of different scholars, both current and historical, who viewed taxation as a main driver of the fall of Rome. Also examples here of people leaving Roman territory to live in Gaul where they could live as free men. [It is fascinating--and sobering--to see this gigantic government turn totally adversarial against its own citizens. Perpetual Traveler was right!]
120 After the sack of Rome in 476 there was no popular movement to revive the Empire that caught any momentum. "People from all walks of life no longer needed or wanted the government of Rome anymore, and Rome's citizens simply did not care if she survived--the Eternal City was no longer first in the hearts of her people."
Part III: The Middle Ages
121 "Most Roman taxes disappeared in the West by the eighth century A.D. The early kingdoms of medieval Europe did not have the expertise to operate the revenue systems of the Romans" thus the medieval system was based on indirect taxes and tolls. Finally comments on how Islam offered a promise of reduced taxes, and it ceased to spread when its converts were no longer offered a tax break. The author asks: "Is this a coincidence?"
Chapter 12: Islam: Death or Taxes for the Infidel
125ff The author uses an absolutely fascinating and totally new lens for thinking about the spread of Islam across the centuries after the collapse of Rome: that it came as an economic liberation, bringing relief to an overtaxed and enslaved Roman world. Very interesting! "Most territories did not put up much of a fight." "In less than 120 years, with an offer of tax immunity, Islam spread very quickly, expanding into India in the East and coming to a halt only at the Atlantic Ocean in the West. The main loser was Christianity, which was tied to the oppressive Roman tax system." Comments however on how the Muslim leadership struggled to establish effective governments and "made the fatal mistake of farming out taxation to local generals and governors," and the system quickly broke up into sub-empires.
127ff General comments on the humanity and gentleness of the Muslim tax policy. The author gives as examples the tax refunds made to Christians and Jews in Palestine in AD 636, where retreating Muslims refunded the tax money they had collected because they were not in a position to hold themselves responsible for the people's safety. [Quite a striking story here.]
128ff On how many historians talk about Muslims crying "death to the infidel" but in practice vanquished people were given three choices: death, taxes or conversion to the faith. [Obviously if you were a Christian and you wanted to propagandize your people against Muslim incursion, you would fail to mention that the third option existed...] "Joining the faith became an absolutely safe and sure way to avoid taxation" ...to the point where it became a serious loophole and "an early example of the overuse of a tax avoidance device." Finally Muslim rulers had to close this loophole: "Spreading the faith was the noblest pursuit of all Moslems[sic], but when pitted against diminishing tax revenues, this noblest of endeavors had to give way. In any contest between God and taxes (like the contest between liberty and taxes), even God must give ground."
130 On the various world religions taxing non-believers, related to the Greek practice of taxing metics (foreigners) as opposed to legally-born citizens; the author argues this was used by all religious groups in Western societies as a stimulus to conversion. Also on the Persian practice of stamping a tax receipt in indelible ink on the neck of a taxpayer, this acted also as a passport while protecting the taxpayer against double payment.
132 On the historical narrative that the Pyrenees mountains were a barrier that Islam couldn't penetrate: the author argues that the tax system in Islamic Spain became deepy corrupt and that's why the Muslims got bogged down in Spain.
133ff Comments here on the gradual corruption of the Muslim caliphs: how they farmed out tax collection to local governors, the system became extravagant and corrupt; this tax system was "the first fatal defect in the structure of the Islamic empire." Discontent spread throughout the empire; Islamic armies no longer brought liberation from oppressive taxation. Also specific comments on how the Islamic death sentence for non-believers was more a function of propaganda from Christian polemicists; people didn't actually need to convert, they just had to pay a special tax. "As taxes went up and spread to the believer, the expansion of the empire went down. This was hardly a coincidence... Moslem tax men ended up rivaling the worst of the Roman Empire."
Chapter 13: Medieval Taxation: When Taxpayers Had God on Their Side
137ff On the feudal system, basically it was a way to survive the anarchy of the era; early on in this system little revenue was generated; the author shares an anecdote about the king of Tours, who made a covenant with the people that he would not burden them with new taxes--much like a modern politician--and when he discovered that one of the counts in his region levied a new poll tax without his knowledge, he was horrified, fearing the wrath of God; the king then destroyed the tax rolls and refunded all the taxes paid. The logic of that era was the king who taxed excessively incurred sin, and a king who taxes modestly would be blessed with sons and wealth; the author jokes that this is a form of divine supply-side economics.
138 Note the striking painting The Administration of Justice by William the Good by the 17th century Dutch painter Nicholaas van Galen, where an over-aggressive tax collector is beheaded:
139 On the Edict of Paris from AD 614, likened often to the Magna Carta, a treaty between rival Kings in the Frankish Kingdom that spread all over northern Europe forbidding all new taxation and abolishing various existing taxes; also on the concept of the exactio inaudita (the "unheard-of tax"), where simply calling something this was enough to defeat it.
140 Various other comments from documents from this era: about how kings earned revenues from tolls, on commerce payments, when a vassal son became a knight, for organizing marriages among elites; many, many comments from the era here addressing the struggles of medieval kings trying to obtain money to fight wars: in other words they simply weren't able to collect much in terms of tax revenues; also on the exemption of church lands and properties, and the exemption for clergy from many tolls on bridges and roads; this prompted many English merchants to disguise themselves as pilgrims or clerics. Then, foreshadowing the next chapter, where medieval European rulers looked around for new sources to tax, and they found... their wealthy Jews.
Chapter 14: The Jews: On the Road to the Final Solution
143ff On the influence of the Jewish community in Europe, maintaining ancient learning and knowledge, on how modern capitalism and banking developed out of Jewish money and commercial practices, on how the Christian people in that era were "incompetent" [the author's' word] in commercial matters and in administering governments, how the Jews' prosperity in their banking and commerce monopolies made them natural targets for taxation; some of these practices continued up to the time of Napoleon. Note the interesting comments on the fiscus judaicus (special tax against Jews) passed by the Roman emperor Vespasian in AD 72, which was abolished by Julian in AD 326; the author shares an interesting note quoting Julian wishing prosperity to the Jewish people. Special Jewish taxes were reintroduced in AD 813 by the son of Charlemagne, Louis the Pious, it was a modest tax at first but "quickly escalated." "Once discriminatory taxes are assessed against a despised minority, it is only a matter of time before they become oppressive... The Jewish tax story is a marvelous illustration of that principle."
145 [Fascinating section here that translate very well to the broad problem of how to store wealth in case your nation-state turns adversarial]: Discussion here of how Jews that were landowners had their land seized with ease, either by tax collectors or for other reasons; you can't hide land like you can hide jewels or gold, so it became obvious to the Jews not to put their wealth, thus they looked for ways to hold wealth in more mobile forms. [Note also how the Roma people, described so beautifully in Jan Yoor's book The Gypsies, also teaches this idea.]
146 Also comments here on how Jews survived because they actually were a quick source of easy cash for rulers, how they sensed this and paid their taxes as a form of protection money on some level; the author goes through a wide range of various taxes assessed to Jews, including a naval tax, where in Spain Jews had to provide the anchors for all new vessels; also on the paradox that Jews were in this era the freest people in the world in terms of mobility, but yet subject to taxes in return for lack of bondage in the feudal system.
147ff On taxes that the Jewish community assessed on themselves; this was a sort of ancestor of modern progressive tax practices; a "paternalistic" tax method involving a wise member of the community assessing each person's wealth; the wealthy were expected to shoulder a larger share; there was a "tax expert" among the community who would determine the share of the community's tax bill, make sure the community members collectively paid their share, divided up based on people's declaration of their wealth. The author argues this is a proto-version of our modern system: the taxpayer starts by making a declaration and paying the appropriate tax but if the "tax expert" looks at the declaration and sees a possible error an audit will be performed.
148 On the English expelling the Jews in 1290; many other European leaders followed, also on the tallage, an arbitrary assessment against Jews invoked by the king at will; this was morally justified because Jews acquired their wealth by "sinful" means; this was a revival of the old Roman decurion system; quickly Christians settle down to an era of little tax as monarchs would be able to fleece the Jewish people at will. Note the story about King John, who ordered a wealthy Jew, Abraham of Bristol, to pay him 10,000 marks, and when Abraham refused, John ordered the tax collector to extract one tooth every day until payment was made. "After seven days, and seven teeth, the assessment was paid." Abraham then committed suicide. [!] The author argues that the Jewish community was plundered until they became destitute, after which King Edward expelled the Jews in 1290 because they were no longer valuable property.
149ff On France expelling the Jews and taking over collection of their lending businesses, thus the Jewish made loans were essentially seized by the Crown; but then in 1315 , because of the "clamour of the people" the Jews were invited back with an offer of twelve years of guaranteed residence; even this wasn't honored: the king's successor expelled them again in 1322. Jews then found favor in Spain under the Moors, but then were expelled by the Christians in 1492, just one year after they were granted a lucrative contract to collect taxes for Queen Isabella. Note also this expulsion was followed by the king of Portugal offering land and sanctuary to Jews in return for a head tax of one ducat plus 25% of the wealth of each Jew, but then six months later he threw the Jews out of his country as well. [!]
150 On the Jewish ghetto of European cities as a sort of tax district, making it easier to collect taxes, charging a toll for a Jew to leave the ghetto; on Hitler's Nuremberg decrees and how they can be traced back to 1343 when the German emperor Louis IV did the same thing, confiscating property etc; various examples here of expulsions and slaughterings throughout Germanic history.
151ff On what the author calls one of "the great unsolved secrets of this period" is the methods by which Jews evaded these taxes and exactions; the author cites commercial paper, an innovation of the Jews during the medieval period as a possible mechanism, also he cites the more prosaic method of burying wealth.
Chapter 15: Medieval England: How Englishmen Purchased Liberty with Taxes
153 The author reviews the story of Boadicea [Chapter 9], and then shares the story of Lady Godiva, who rode nude through town in order to remit the taxes of her husband in the 13th century; on the danegeld, a tax on land to protect against the Viking menace; on William the Conqueror in 1066 replacing the danegeld with a tax on plowed land only; on the Doomsday Book [today most use the medieval spelling "Domesday"] that William had produced to make a complete survey of all the land and personal property in England; the author argues that tax revolts crippled William's efforts at tax collection.
156 Comments on how knights were required to spend 40 days per year in service of the king, but in time a money payment developed in place of this, called the scutage; also on the feudal tallage which took various forms, but was an arbitrary tax passed through the ranks of the feudal system; it could be on land, capital, personal property or a poll tax; also on the aid: when a king had special needs, he would meet with his counsel of barons asking for an aid, they would debate the request and pass it or not and then this tax would pass through the ranks of the feudal system to the vassals of the realm. This was a form of early national taxation.
156ff Comments on the Magna Carta which was not a particularly novel document at all, as charters restricting the king's taxing powers were common throughout the medieval era. In the days of the Magna Carta, king John raised the scutage taxes several times; he made the tallages, which were supposed to be occasional, perpetual; and then added still more novel taxes to the point where the country's nobles forced him to sign the Magna Carta "which would stop his continual disregard of the tax customs of the realm." Note also the comments here on tax provisions for merchants where the Magna Carta created a free trade zone in an era where merchants were never sure of their rights for passage in and out of England or what taxes they would be assessed while doing so; thus the Magna Carta prohibited excessive tolls at seaports and protected trade from internal tolls and duties. The author quotes the Magna Carta section XLII: "Let all merchants have safety and security to go out of England, to come into England... without payment of any evil or unjust tolls, on payment of the ancient and just customs." The author also writes that the US and Canadian Constitutions also adopted this principle of internal free trade.
159 On Henry of Ghent and his writings on legal theory from the late 13th century; this developed a legal doctrine that the king could not levy extraordinary taxes except under certain circumstances; see for example a tax for war, which had to meet certain standards.
160 Discussion here on various examples of debate and bargaining over taxes which "eventually gave birth to parliamentary government. The king needed revenue, but revenue depended on the reasonableness of the king's request. Even then, Parliament learned to grant taxes in return for favors from the king. Tax moneys had to be bargained for and this bargaining process became the essence of politics. Liberties and rights were granted by the king in return for money." Also comments on the English government's separation of powers, which differs from the American system (where Congress has both the power to tax and to spend): "The King could spend but not tax; Parliament could tax but not spend." Today's modern definition of "separation of powers" doesn't include taxation powers, and thus the author argues "Our current runaway taxation is the natural consequence of our abandonment of that ancient English practice."
Part IV: Russia, Switzerland, Spain, and Germany
161 On looking at Russian history through the lens of Russia's tax history, which developed out of the tax brutality of the Golden Horde and the early Moscow rulers; then Peter the Great put Russia on a course to superpower status by reorganizing a tax system that had crippled economic growth for centuries; then on how the Communists revised the system still further, putting everything into state service; on the Swiss culture's heavy influence on Western civilization; on the collapse of Spanish power in the 17th century, which the author suggests is largely due to tax troubles; and then on Germany, where the Holy Roman Empire was a mere figurehead because he could not tax across the various territories; modern Germany was forged as Prussians imposed taxing power along with their military rule.
Chapter 16: Russia: The Tax Road to Serfdom and the Soviets
163ff On Russia under the yoke of Genghis Khan and the "Golden Horde" during the Renaissance, initially the Russian peasant was free to move around; on the early Kievan system of dividing the countryside into tax districts administered by directors who lived in the district all year; this caused Kiev to dominate its region and become a leading city of Europe by the 10th century; also on the Khazars, a Jewish kingdom in the Black Sea region which taxed trade along the various rivers at a 10% rate. "Thus Russian control over the Slavic peoples when they expelled the ruling Jews over a 10 percent tax." We do not know much about the Khazars, but after they were destroyed the steppe region that they had brought under order was taken over by Tartars, a group the Russians could not pacify; see the Russian opera Prince Igor which tells about this stalemate and ultimate peaceful coexistence.
164ff Later the steppe region full under the control of Genghis Khan, who demanded not just a 10% tax on a one-time basis but 10% annually. The Mongol process would be pay the tax or die; this would involve surrendering a tenth of everything, population included. The Mongols were interested only in taxes and recruits for their armies. Per the author, they showed no interest in Russian culture, or any culture for that matter. Under the Mongols, Russian civilization slipped back into a dark age at the very time the West was moving out of its dark ages into the Renaissance.
165ff On the three distinct phases of the Mongol tax system: first farming out tax collection to Muslim merchants from Baghdad because tax collection was "beneath" Mongol warriors; these tax farmers were slavers as much as tax collectors; later this was replaced by a more of a census system, administered by Mongol tax directors supported by a garrison of warriors; and then the third and final system which carried its own seeds of destruction, where the Khan made the mistake of relinquishing control over tax collection to Russian princes; one of these princes, Ivan I, who was nicknamed "Moneybags," took over tax collecting in Moscow; he was so successful he was appointed chief tax collector for all of Russia, thus Moscow became a clearing house for all Mongol taxes; the prince of Moscow started to acquire adjacent principalities; he had access to the best warriors because of all of his tax revenues; basically he obtained control of Russia by controlling the tax system; making the next step to tsar "easy"; there were plenty of revenues to build the Kremlin, for example, the only fortress in Russia capable of withstanding a Tartar siege. Over time Mongol control of Russia faded although it wasn't until the 16th century that Ivan IV, ("Ivan the Terrible") finally broke Mongol control of Russia, repudiating his tax obligations to the Khan.
168ff On Ivan and his oprichniki system, basically a group of "black ops" tax collectors who would confiscate lands of the nobles, and also root out traitors and enemies of the Tsar.
169 Nice pun from the author here: "The road to serfdom in both Russia and Rome was similar." [I'm sure the author is familiar with Hayek's famous book The Road to Serfdom.] Basically in both cases overtaxed peasants accepted bondage to large landowners as a way to avoid the tax collector. "The bondage of serfdom was less oppressive than the tax burdens of freedom." On the gradual process of the grinding serfs into bondage via a tax system that imposed tax debts that were basically designed to not be payable.
169ff On Peter the Great, crude as a person, but a savvy and effective leader, determined to remake Russia to Western standards, and leading a sort of Renaissance of Russia: redoing the tax system, stimulating economic growth, decentralizing the state; on Peter replacing the former tax system based on a plowed land tax (which took away incentives to put land to use) and a household tax which gave peasants incentives to live in a common dwelling; he replaced this with a type of poll tax called the soul tax; peasants would pay a flat rate and could keep the residual extra revenue they made; the author says Peter captured the spirit of Adam Smith. He found however that this tax didn't collect much revenue so he made a new census, realizing there was huge amount of unemployed, unregistered drifters in every town, thus he adjusted the tax system giving four choices: pay a poll tax, become a serf and live tax free, enter military or civil service, or be a slave. Then the serf's lord had to pay a poll tax on all serfs on his land [see also Nikolai Gogol's novel Dead Souls]. Thus the peasant was relieved of his tax liability in return for giving up his freedom. Comments here on all sorts of other things Peter taxed, ranging from beards to burials to all sorts of commerce and trade in and out of the country, also taxes on legal documents, state monopolies on salt, tobacco, etc.
173 On Peter attempting to impose capital controls: note the author dropping a quick truth bomb here: "Private capital has no national allegiance--it always seeks the safest and most profitable sanctuary."
174 On the Cossacks: if serfdom was too oppressive a peasant could always join the Cossacks, thus under Peters taxes some 100,000 peasants fled to the Cossacks' region; the Cossacks were for tax immune; this was intolerable to Peter: "he was losing recruits and taxpayers." He attempted to "close the Cossack door of escape" and this more of less left a legacy of peasant uprisings at home afterward, as escaping to the Cossacks was a sort of safety valve for peasants who would cause problems. After Peter's death peasant uprisings happened almost monthly.
174ff Aaround the time Lincoln [sort of!] freed the American slaves, Tsar Alexander II freed the serfs in Russia; sidebar here on the different types of serfs in the region; the author offers a metaphor here of how the banking system is surveilled by nation-states because income taxes are paid in money and money moves through banks, thus surveillance of flows of money through the banking system is how they ensure compliance; the serfs/peasant labor was the primary source of revenue to the Russian state, thus it sought to control peasant movement: "The Russian state, like our own, was merely looking after its revenue."
176 Interesting comment here to end this chapter where how the author talks about how Russia's made many great sacrifices repeatedly protecting Europe: for example they absorbed the Mongol invaders, they put an end to Napoleon as well as the Nazis by way of tremedous sacrifice. But also they ran the Soviet experiment--where the state took everything--and this was yet another sacrifice of the Russian people to show the world the horrors of such a system. Very interesting.
Chapter 17: The Swiss: From William Tell to No-tell
177ff "Tax history would be incomplete without a look at this remarkable country." On the Swiss prioritization of financial privacy; how liberty requires privacy; on the fundamental relation between taxes and liberty
179ff On the Swiss league of mutual assistance in the late 13th century where various Swiss communities revolted against King Rudolph of Hapsburg, leading eventually to the 1315 Battle of Mortgarten Pass, crushing the Hapsburg army. [For much, much more on this fascinating conflict, see Chapter V of Charles Oman's The Art of War in the Middle Ages.] With the exception of brief rule by Napoleon, the Swiss have mostly remained independent since; on the birth of Swiss neutrality, formally recognized by all of Europe in 1815; on the 1848 Swiss Constitution, based on limited federal government with a confederation of Swiss cantons. [Note, sadly, that the Swiss have frittered away their neutrality with their geopolitical decisions over the Russia-Ukraine conflict, agreeing to freeze assets, to sanction participants, etc. This is potentially a catastrophic error for the country.]
181ff On various differences between Swiss government and other democracy styles: for example, revenue decisions and tax increases must be submitted directly to the Swiss people, rather than handled by a representative legislatures. "The Swiss people keep an extraordinary check on the taxing power of their government." The author cites a 1975 referendum to increase income tax rates and a 1991 vote to approve a value added tax, both were turned down. "The Swiss practice of submitting all revenue matters to a vote of the people embodies the wisdom of separating the power to tax from the power to spend." [I wonder if this is still true of Switzerland: if they did what they did with their "neutrality" who knows what else they might have done to wreck this feature of their system too.]
182ff Comments on the Swiss resistance to the USA's IRS when the IRA wanted their banking sector to gather information on a routine basis; treaty negotiations between the US and Switzerland were broken off in 1990 because the Swiss people were unwilling to permit their government these "snooping" powers; comments on the difference between Swiss banking and, say, American banking, where the government has tremendous powers to look at records, to debank people etc. [This also is a feature of the traditional Swiss system that is dying out, see below].
183ff Discussion here also about English common law, with its "castle doctrine," something fundamental to English/Anglo-Saxon law which is of a similar stripe as bank secrecy; "the king is not allowed to snoop into your castle." But as modern banking developed the English lost sight of this in financial domains. [A brief search will reveal that in 2018 Switzerland basically pissed away their famous bank secrecy laws and began cooperating with various governments, including the United States, exchanging financial surveillance information.
184 Final comments here--and mournful ones--as the author writes: "There is a saying in Switzerland that the people want to be as free as their fathers. The Swiss are among the few people in the world who have come close to that wish. Most of us have surrendered the bulk of the privacy and liberty we inherited from our fathers to the ever-expanding tax bureaus of our ever-growing governments."
Chapter 18: The Collapse of the Hercules of Europe
185ff "No nation in history better illuminates the thesis of this book than Imperial Spain. This great empire, which has never been equaled, was devastated by rebellious taxpayers from all ranks and in all possible ways." On the disintegration of the Spanish Empire, which began in the 17th century, the author notes parenthetically here that the English like to think the Spanish Armada defeat was the cause, but in reality two-thirds of the ships of the Armada managed to sail back to Spain. On the alcabala, a 10% excise tax on the transfer of all real and personal property, invented by the Muslims who brought it to Spain in the Middle Ages; also Queen Isabella in 1504 called for the abolition of the alcabala in her last will, but it produced so much revenue that it could not be abolished; on how it depressed industry and trade as the same goods, as they changed hands, would pay this tax over and over again, circularly raising prices and making Spanish goods uncompetitive against foreign goods that were usually smuggled into Spain.
186ff On Charles V (reigned 1516-1556) and his various failures at extracting taxes from his loosely knit bundle of provinces; also on some of the tax revolts that happened during his reign, some of which he effectively crushed; also he tended to maintain a system of deputy "client nobles" who he would pay off with lucrative pensions, offices and benefits to get them approve new taxes; also on his tax agents using torture in their collection methods. Comments on a 17th century Spanish writer mentioning the depopulation of Castile by flight to avoid tax. The author says that these fleeing taxpayers ended up going to the Americas. The author cites Bismarck, writing 200 years later, mentioning the flight of Spanish taxpayers in a comment where he opposed German colonies because Germany "might end up sending her best blood overseas as Spain had done." Also on the concept of wanting to be a hidalgo, a noble; Spanish commoners dreamed of achieving this status to be able to "disdain" work and avoid taxation.
190ff Comments on the Dutch revolt against Spain its 10% tax, which the Dutch called the "tenth penny"' at the time the Netherlands was a part of the Spanish Empire. This led to a prolonged civil war dominated by guerrilla warfare where even Dutch women took up arms.
194ff On the Spanish crown using the military to crush Basque resistance against taxation, and then later Catalonian resistance; this triggered a war in Catalonia that many historians believed believe mortally wounded the empire; the conflict with Catalonia was triggered by Spain requiring the quartering of troops without means of support, and it resulted in a ten-year civil war at an enormous cost at a time when Spain was involved in crucial military conflicts with the Dutch, French and English; "Spain's last reserves were spent at home fighting tax rebels. The overseas empire could not defend itself."
194 Also during the civil war in Catalonia, Portugal revolted over a 5% alcabala tax; Likewise there were revolts in Sicily and Naples after Spain placed excise taxes on food. All of this conflict at home cause Spanish power abroad to collapse, letting the British seize Jamaica and other Spanish colonies, while the Dutch took over the East Indies. Note this final reference here to the USA punching down on Spain in 1898: "...in time the pickings were so easy it was not considered sporting to take them. The last of Spain's empire fell to the United States in the Spanish-American War--a war many European powers considered decidedly unfair on the American' part."
195ff Examples here of smuggling and various ways to get items into Spain without paying the "royal fifth" the tremendous 20% customs tax on silver and other goods; in addition there was a convoy tax of 6% that was quickly raised to 35%. The author shares data on declines in silver imports and other imports that were not due to the actual records but due to tremendous taxing, incentivizing smuggling.
Chapter 19: How Cortés Found That Taxes Were the Chink in Montezuma's Armor
199ff Disputing the romantic narrative of Cortez's victory in Mexico, in reality Montezuma was well aware of the Spanish, he knew they were people, not gods; on the Aztec empire which had arranged an organized collection of tax-paying vassal states where there was no attempt to rule over them, they were simply vassals expected to pay tribute. This was the new world's age of terror-taxation. The Aztecs were continually fighting small brushfire-type tax rebellions that plagued the entire empire.
200ff Various examples of tax rebellions in Cotaxtla, where Montezuma's revenue agents were murdered; also on the Tlaxcalans who Montezuma never was able to subdue. The author makes the argument that Montezuma's military possibly didn't have much genuine competence as it experienced such indecisive results against the various rebellious cities on the edge of the empire.
201ff On how Tindile, the local strongman in Veracruz, where Cortez arrived informed Montezuma about all of Cortez's movements, the Spanish soldiers' various strange beasts and "sticks that spoke with fire" (guns), cannons and sailing ships, etc. Montezuma gave Cortez large initial gifts but it just whet his appetite for more, plus it showed him how much more there was to get. Also note the interesting discussion where Cortez, when he was in Veracruz, noticed that when the Indians heard that Montezuma's tax men were coming they trembled with fear; Cortez arrested these tax men, roughed them up, and then released two to go back to tell the story to Montezuma. Also the Spanish easily subdued the Tlaxcalans, shocking Montezuma, who invited the Spanish to Mexico City. Ultimately, the Spanish destroyed much of the culture of the Aztecs, but they preserved meticulously preserved its tax records in order to exploit the riches of the area. "So effective was the Aztec tax system that not even the dates of payment were changed by the Spanish."
Chapter 20: Taxes Forge Modern Germany
205ff On the massive peasant uprising across Germany in 1524; on Martin Luther initially supporting the peasants, but then changing his mind after observing their death and destruction; the slaughter in response from the German nobles depopulated Germany for over a century; on the Hohenzollern family which grew in power and territory after the peasant revolts.
208ff On Prince Frederick William of Brandenburg, 1640-1688, the Great Elector, who was one of the Electors of the Holy Roman Emperor; the Electoral College in the USA is derived from this German institution; on his efforts to invite Jews and French Huguenots to Germany to repopulate the region using special tax privileges and favors; also on his mercenary army which was also used to construct public works, as well as administer the tax system. On an excise tax paid by Junkers, the landed aristocracy in this region, in return for protection from this mercenary force.
209ff On Frederick the Great, great-grandson of Frederick William, and his Jewish taxes, which survived until 1850. Also an interesting anecdote here: during a period when Frederick was running low on funds (his enemies had captured his treasury), he reopened tax rolls back to the year 1221, forcing towns to repay taxes they may have missed many years before. The author cites this as another example of how there's really no statute of limitations for a taxpayers' returns or his tax debts. "Frederick was doing on a village level what we do on an individual level."
211 Quite a cute story here where Frederick asked his finance minister why his treasury was so low when the subjects were paying so much tax; the finance minister took a piece of ice and handed around the room, so that by the time it got to Frederick it was just a wet hand. And in the endnote here, the author cites his old history professor, thanking him for inspiring his love for history. Cute!
Part V: The Ancien Regime
213ff A compare and contrast discussion here of the Middle Ages-era French Crown to the English Crown, the French King in these era was more or less a medium-sized baron where many French nobles were larger and more powerful than the King of France; but the English King, starting with William the Conqueror in 1066, was all along the absolute ruler of England. Also the journeys of the two crowns were likewise different: England started at the top of the mountain and moved down to where it is a mere figurehead today; the French King started at the middle of the mountain, then moved to the top, until he was executed during the French Revolution. Also there was no Magna Carta necessary in France because the feudal contracts granted freedom from taxation for most nobles. Note also the mention of Flanders, where a local count invited weavers to come and live, under the express condition that there would be no taille (or tallage) tax; this created a tremendous textile industry in the long run in the region.
214 Comments here on France's Philip the Fair, who expelled the Jews, seized their wealth, and according to the author started France down the road to Royal absolutism by lawlessly fleecing the Jews, then stealing money from the rest of France's bankers, then turning on the Church to tax Church properties... and then actually kidnapping the Pope to establish a papacy on French soil--the so-called "period of Babylonian captivity," the Avignon Papacy. Also on Philip's grandson, who was the crown prince of England, and how the French managed to figure out a legal way to wrangle out of the combining of these two kingdoms.
215 Finally comments on the "Jacquerie" peasant revolt in 1348 during the Hundred Years' War and the peasant massacres that followed in reprisal; the author talks about how peasants had no representation or no voice in regards to their taxation, they only had one means available to respond: violence.
Chapter 21: The Devil's Tax System
217ff On the revenue system that evolved out of the taxing powers granted to the French monarch during the Hundred Years' War; the author calls it "a high watermark in bad taxation," teaching us about the evils bad taxation will produce; comments on the nature of the French crown where it may have technically had absolute power but there were so many tax revolts that one can question how much power it actually had. "The so-called absolutism of the French monarchy was only a facade." On the taille, the French version of the land and wealth tax, how it began as an ordinary annual assessment after the Hundred Years' War, fluctuating with the king's military needs. The nobility and clergy were either exempt or had reduced rates, for some it was a land tax, for others it applied to all wealth; in the 18th century it was called the "peasant's tax" because everyone else had found a way to avoid it; the taille was not abolished until the French Revolution.
218 Note this great quote from Pierre Samuel Du Pont de Nemours, speaking to the French National Assembly: "One will hardly believe that in order to become noble it is sufficient to become rich; and to cease to pay taxes it is sufficient to become noble. So there is only one way of escaping taxation and that is to make a fortune."
220 On the gabelle, which was an excise tax "levied on just about everything that moved, including food." The author gives an example of how it worked on wine: "On wine there were five kinds of excises: a tax on the vine, a tax on the harvest, a tax on the manufacturer, a transportation tax, and a tax on the sale. The poor drank cider." Also on stamp taxes, usually 5%, that were in addition to other taxes, requiring use of specific government paper that could only be purchased from the Crown; also because smuggling couldn't be stopped effectively because France had such a huge coastline, customs were levied at the entrance to major cities and towns: these were called octroi. On top of this there was "extraordinary revenue" which were taxes collected from various taxing schemes that have fascinated economist for centuries: including things that look like sale-leasebacks, using wealthy nobles as guarantors behind the Crown; also the Crown raised revenue from the sale of titles and offices; you could think of these as interest-free perpetual loans to the government; also on another interesting form of loan where if a holder of an office wanted to increase his revenues he would have to pay a fee to the Crown such that the increase would be 5% of the capital paid; thus the salary increase was effectively the government paying interest on a new perpetual loan. Other examples of corrupt office and title selling, here such that the Founding Fathers of the United States specifically addressed twice in the Constitution what they called "emoluments."
223ff On tax-farming and how it was used widely in France because there was no machinery or even inclination among the Crown or the nobility to collect taxes. "Private tax collectors, usually Jews, paid the lord a fixed sum in advance for the right to collect tolls and customs." Thus the Lord got cash up front and didn't have to have a (usually corrupt) tax bureaucracy. Also the author mentions how the tax farmers actually were a source of money creation since they essentially provided the government credit. These tax farmers eventually formed large national corporations, dividing the country into tax firming districts; there was also a secondary market of tax farming contracts, and the Crown could assign these notes to pay its debts; usually they were accepted at below face value [think of this like a zero-coupon bond, or a bond sold at a discount to face value]; and then also the Crown at times would issue tax-farming notes against tax receipts that did not exist, a form of paper money debasement.
224ff Next on John Law and his National Bank which monetized government debt, the bank's credit was based on exclusive rights for all trade for Louisiana and Canada; this is not much different from Englland's South Sea Company, which monetized English national debt. The bank issued unbacked paper notes and eventually collapsed, Law fled into exile. Finally on the French Revolution, which marked the end of tax-farming.
Chapter 22: Many Revolts--One Revolution
227ff More comments on the various tax revolts across French history; the author contrasts peasant revolts in France to peasant revolts in Germany which were class-based where they would kill anyone noble, in France they would kill only tax collectors or anyone associated with them; also comments on the economic thinking in the ancien regime which was that heavy taxation was the "best medicine"; the [unfortunate] metaphor used then was "The poor were like grass--the more they were cut down, the stronger they would become." The author likens this to 1947 USA tax policy using the same mentality to justify that era's extremely high progressive peacetime tax rates. On how the peasants would protest with mayhem, arson, murder; a comment here from a finance minister confessing to the Queen of France that it was safer for a French tax collector to walk through a Spanish village (France was at war with Spain at the time) than to walk through the streets of this province. Also each region had to fend for itself: there could be a tax revolt forcing the Crown to reduce taxation in Bordeaux but Burgundy still had to fight its own battles separately.
229ff On the Normandy region and its long cold war with the Crown which heated up from time to time over taxes, the author argues that Normandy operated on the brink of rebellion, but it was never a threat to the Crown, just to local tax revenue collectors. The author describes a sort of regionalism and splintering of political power throughout the country hundreds of years ago. "Because of this, the monarchy was secure, no matter how rotten it was."
232ff Louis XIV and his two remarkable finance ministers, Colbert and Vauban, both making gallant but unsuccessful efforts at tax reform. Louis XIV ended up dismissing and exiling Vauban as he recommended a 10% income tax in place the taille.
233ff On intellectuals of the period leading up to the French Fevolution, like Voltaire, Rousseau and Montesquieu, who focused on social injustices of the tax system. And then on one final attempt to reform the tax system that essentially got buried in the violence of the French Revolution.
Part VI: The Magna Carta
237ff Thanks to the Magna Carta essentially England's tax struggle shifted from King versus Parliament to Parliament versus taxpayers; in 1379 Parliament considered a graduated poll tax but eventually adopted a single poll tax, flat at one shilling for every man and woman over the age of 14; thus this was a very regressive tax that triggered an English peasant revolt. The revolt was eventually crushed, but it was effective in the sense that future poll taxes either excluded the peasants or taxed them at nominal rates. Also on the use of "tenths" and "fifteenths," which were basically wealth taxes one-fifteenth of the assessed value of a personal property would be taxed, or one-tenth of rentals properties would be taxed, this would be set at a flat rate [off a lower than market value assessment] paid by a family for generations. Also a comment here from Sir Walter Raleigh complaining to Queen Elizabeth that actual values were 100 times greater than those reported on her subsidy books, but she did not object, citing (in her words) "a tradition of evasion in the realm."
Chapter 23: The True Sovereign of England: The King or the Common Law?
241ff On Henry the 8th pulling out the biggest heist of all time, stealing the assets of the Roman Catholic Church throughout England. On his initial tinkering with the tax system--without success, because of the refusal of taxpayers to pay; his attention turned to the church as Henry noted large quantities of gold and silver leaving England for Rome--as the Pope received more wealth than Henry did! The author mentions the historically assumed trigger for Henry's conflict with the Church, which was wanting an annulment to his marriage to Catherine of Aragon; the author suggests that he may have game theoried this out and sought this annulment knowing the Church would reject it since he cut off revenue to the Church shortly before asking for it. He then began selling off monastic lands and redirecting tithes and offerings to his own coffers, although he dissipated all this wealth and ultimately incurred tremendous debt, which took Elizabeth I some 15 years to discharge.
243ff Comments on Queen Elizabeth's modest tax policies, her reign was "highlighted by unbelievably low taxation for its time." On the conflict with Spain she issued ship-writs for ships, sailors and guns; they were filled beyond expectation; she asked Parliament for taxes for this conflict and was granted them quickly, within two months the money was collected; unheard of in English history. The author argues that she was the first in the post-medieval period to prove supply-side theory, she noted how taxes had impoverished France, she inherited a bankrupt monarchy but then left it with a sizable treasury despite engaging in a costly war. Yet she kept tax valuations at extremely low levels, effectively reducing tax rates.
245ff On Elizabeth's successor King James and his attempt to raise taxes unilaterally; this was blocked by Parliament; then James increased custom duties by 200%, this was fought in court in the famous Bates case; judges made a distinction between royal prerogatives such as foreign affairs which are outside Parliament's jurisdiction, thus the ports were thought of as "the gates of the king" and could thus be regulated as the king saw fit. Parliament then responded to the Bates decision and Lord Edward Coke, the leading lawyer and legal scholar of that era, began a legal attack based on various ancient rulings and writs; comments here on Lord Edward Coke viewed as one of the greatest judges of all time, "a great dissenter" who was "admired during his lifetime in England as much as he is today." On his argument that the Common Law was the true sovereign of England and even the king had to obey it.
247ff Charles, James's son, negotiated a deal with Parliament called the Petition of Rights, which curtailed the king's power of taxation without the consent of Parliament; Charles later dissolved Parliament and then began extrajudicial revenue collections.
249ff Charles then attempted to raise an army to go to war against Parliament and in the a vacuum of power Parliament took over the government and raised an army of its own, and collected its own taxes for it, and thus started England's civil war under Oliver Cromwell; Cromwell's government adopted a European-style excise tax, a new wealth tax, and even a weekly "fast tax" which was based on the value of one meal per week. "The king could not compete with Parliament over taxes." Comments here on the so-called "rump Parliament"; the author calls it a typical course of most modern revolutions where control of the revolutionary Parliament shifted to radicals, whereas the moderates were expelled; also elections were not held because the Parliament knew it didn't have public support. After Cromwell's death, the monarchy was restored, provided it disclaimed any power to tax on its own; this settled the issue of Parliamentary control over taxation with finality.
Chapter 24: Parliament Searches for a Better Tax
251ff On the irony that post-revolutionary taxes in Britain, Holland and America were much heavier than before. "Even the tax rebels in America discovered that taxation with representation was heavier than taxation without representation. As events turned out, when the rebels won, the taxpayers lost. This is one of the strange ironies of tax history... If anything, taxation through representatives provides government with the opportunity for greater taxation, probably because the threat of rebellion is reduced." [Gosh, this guy really does drop some truth bombs from time to time.] Comments on various new taxes put in place when Charles II was restored, see for example the hearth tax, assessed for each fireplace in every house: this tax was farmed out to private tax collectors who were permitted to enter and search any home. This tax was repealed during the Glorious Revolution, then later replaced with an even more despised graduated poll tax.
253ff On poll taxes and Parliament's experiments with it over time, "always with the danger of rebellion"; these were replaced with a window and house tax and land tax, the house tax was one shilling per window (with a seven-window "exclusion" which exempted the poor); the benefit of a house/window tax was that it could be counted from the outside. The author notes a row of houses built in Edinburgh with a single window in the bedroom.
254 During the English Civil War the "Long Parliament" adopted an excise tax; previously England was widely noted for an absence of excise taxes; it started with taxing liquor then spread to clothing, bread, meat, etc. The author discusses some of the possible virtues of excise taxes: for example it can be limited to luxuries only, it's also easy to collect since only merchants need to be audited; note that English hatred for these taxes seems to border on excessive as traditionally they were much less used in England than in other countries.
255 Interesting comments here about Sir Robert Walpole, called Britain's first Prime Minister, since the office didn't exist until his ministry in the first half of the 18th century; how the House of Commons had a free vote on all tax matters in those days and members could vote how they wanted rather than be required to vote on party lines on taxes.
257 On mobs roaming the streets protesting Walpole's attempt to reduce land taxes while reintroducing the salt tax in 1732. Walpole thought he had locked up the House of Commons in support, but then ended up withdrawing the tax bill and even offering his resignation. Also note this quote: "Walpole's brutal tax system can best be understood if one realizes how intense his hatred was for the merchant classes of Britain. All his new enforcement sledgehammers fell on them, and it has been suggested that his brutal tax administration laws, for both customs and excises, were an act of revenge against a faction of society he hated and despised." The author likens this to FDR using the federal tax system against wealthy classes that he didn't like. In general however Walpole's tax policies were still not as severe as elsewhere on the continent.
260ff Comments on aspects of the administering of the excise system; there were summary judgments without a jury or even a judge; no right to move to a higher court; the cards were stacked against the merchant; even countersuing the officials was hazardous because of the court provision of the lower paying double or triple court costs; also on the surveillance of industries that were subjected to excise taxes: see for example how the candlemakers were forced to show complete records of candles made, cracked or broken candles had to be destroyed in the excise officer's presence, etc. The author writes that this surveillance "reminds one of the computer and income tax surveillance conducted today."
261ff Final comments here on the unusual exception in British parliamentary history that traditionally the threat of rebellion and the voice of the House of Commons typically forced Parliament to moderate its tax deamans; the author contrast this with the economic drag that happened in the Netherlands due to massive taxation. Also the author remarks on the absence of tax immunity for the rich in England, as well as England's use of progressivity in their tax system, as opposed to most other countries that were highly regressive. Part of the idea behind charging low taxes on low-paid people was based on business sense: if workers paid high taxes British capitalists would have to pay higher wages; see for a contraexample the Netherlands, which had higher taxes and higher wages, making its products uncompetitive internationally.
Chapter 25: The Decline of the Super-Dutch and the Rise of the Super-British
263ff On how the Netherlands themselves came into being 200 years before the USA as a result of a revolt against taxation without consent; on the decline of the Netherlands due to their tax policy which morphed into a commercial cancer that would emaciate the economy; on how the Dutch had spread outposts and colonies all around the world, including even Japan. Note also the comments here about smuggling in England to evade high customs duties designed to keep Dutch goods off English markets, but there were so many bays and coves along England's shores, and smuggling became so extensive and profitable that young men couldn't be found to harvest crops growing along the seacoast areas. Some 50% of all imports were estimated to escape taxation during this era.
266ff On the decline of the Dutch Empire it did not collapse, it declined (much like the British Empire) from too much tax too much debt and too many military expenditures beyond its capabilities [I wonder if this will be the outcome for the USA as it commits these same foolish errors]. The Dutch had to maintain naval forces to protect their sealanes and eventually Dutch goods priced themselves out of foreign markets, wages were much higher because taxes on wages were much higher; the author quotes various British observers at the time who were astounded at the Dutch people's tolerance for various excise taxes; on the Dutch ruling families who created sort of a privileged urban oligarchical elite; on an 18th century brain drain as the more enterprising Dutch people moved abroad.
268 Note the authors comment here about today's European value added tax, which is basically an excise tax added to goods at each stage of manufacture, rather than once on the final value of the goods as a whole, and so the taxes run up and down the manufacturing process; this reduces evasion and makes the system self-administering.
268ff Dutch primacy gave rise to British primacy due to superior tax management in Britain in the 18th, 19th and 20th centuries. The author argues that the decline of Britain in the mid 20th century is explained by their venture into socialism, 95% tax rates, and the country's nationalizing/takeovers of various industries, causing, for example, British cars to become "as unreliable and as defective as Soviet washing machines" as the author phrases it. [The other major work I've read on England's decline, Correlli Barnett's excellent The Collapse of British Power, disagrees with this assessment, placing the decline much earlier and due to many more causes.]
269ff On various improvements to the British tax system after Cromwell; the abolition of all tax-farming, replacing it with a tax bureaucracy that was efficient and merit-based (and where agents were moved from district to district to prevent becoming too friendly with the taxpayers), elimination of export taxes on manufactured goods, and the reduction of many tariffs which stimulated trade; also the excise tax, which was a major source of revenue, but never as burdensome as in other European countries. There was no general excise on everything in sight, the government had enough sense to keep the rates low and limit the amount of things taxed: "This may have been more the consequence of the hostility the British people had for the tax then for the wisdom of the government." Also comments here about British tax "brinksmanship": balancing desired tax against the very real possibility of violent rebellions from the people, only in the North American colonies did the English really crack down hard on tax rebellion.
271 Final comments here from the author that the Britain-Holland metaphor may have a modern form in the relationship between Japan, Taiwan, Singapore and Hong Kong relative to the declining primacy of the United States.
Chapter 26: The Enlightenment Had the Word on Taxation
273ff On how the Enlightenment was the high water mark for tax wisdom and common sense. The author makes an interesting comment about how the 19th century caused the United States to forget the evils of our tax system thanks to such a long period of tax peace and low taxes during the 19th century: our short memories causes us to lurch into the extraordinarily high taxation of the 20th century. The Enlightenment thinkers, on the other hand, had the lessons of the immediate past right there for them. The author then spends the entire chapter going over the ten major insights of Enlightenment-era limited government thinking. "Most of these ideas have disappeared from the world of ideas we now live in, and modern experts in the field of tax and government seem to be unaware of what these men left to posterity."
275 1) On the idea that "government is at best a necessary evil": citing Thomas Paine and his pamphlet Common Sense; on the naive attitude of people today toward their government, believing that government is some wonderful mysterious thing. [Murray Rothbard, in his book Anatomy of the State, addresses this modern delusion. I think in the past few years, with the increasingly adversarial behavior of the US government, even the most trusting among us are now beginning to realize how much our government hates us.]
276ff 2) On the imaginary wants of the state: see Montesquieu and his book The Spirit of Laws, which greatly influenced the framers of the US Constitution; on Montesquieu's quote "The real wants of the people ought never to give way to the imaginary wants of the state." Also Montesquieu's warnings of the charms of an extraordinary project. "Often has it happened that ministers of a restless disposition, have imagined that the wants of the state were those of their own little and ignoble souls." The author cites the Vietnam disaster as just such an example from recent US nation-state history.
277ff 3) That government should stay out of business: the author cites socialist/communist nation-states and also capitalist states that have ventured into nationalizing industries.
278 4) That liberty carries within it the seeds of its own destruction: the author calls this the most startling conclusion to come out of the Enlightenment, citing Montesquieu again in The Spirit of Laws that people living in liberty tend to let their guard down and then realize they can't get the government to take a backwards step.
278 5) Direct taxes are the badge of slavery, and indirect taxes the badge of liberty. The author cites Greek and Roman thinking that direct taxes are essentially a form or serfdom or servitude.
278ff 6) Tax evasion is not a criminal act: This is an interesting one: the author discusses John Locke and his Second Treatise on Civil Government, referring to how laws and rules must conform to the law of nature, contrasting this with the conception of divine right of the monarchical governments of Europe where the king had the power to create crimes and could ignore the laws of nature. [It is interesting hearing the author refer to Henry VIII manufacturing hundreds of petty regulations that would be enforced as felonies, including penalties as severe as hanging; it makes one think of the modern analogy where we have so many crisscrossing legal and regulatory constraints that in aggregate they make all of us into criminals, technically--the government just has to snoop around a little bit and figure out which of the innumerable rules we have broken. At the same time, the idea that "tax evasion is not a criminal act" smacks of Irwin Schiff's delusional thinking about the legality of the income tax, a view that put him in jail for quite a long time.] The author cites Adam Smith, who characterized tax evasion as a synthetic or unnatural offense, not a crime; the author also cites Albert Jay Nock and his book Our Enemy the State. [Back in 2023 I reviewed a striking--and at times odd--book of essays by Nock, On Doing the Right Thing.]
280ff 7) Liberty's most dangerous foe is arbitrary taxation: The author says the thinkers of the Enlightenment, based on their belief that taxation was arbitrary, believed that evasion, defiance, violence, treason and armed revolt--even the overthrow of the government by force--were justified. A discussion here of the semantics of the phrase "arbitrary taxation" which is not clear to a modern; the author argues that there are three principles that stand out, and when taxation violated these principles it was arbitrary. 1) taxation with consent: the tax must be consented to: "Tax laws had to have a consent of the taxpayer; other laws did not." Comments on how the American Revolution arose out of this concept. 2) the tax had to be apportioned by a definite standard or rule: basically every man is bound to contribute to the public revenue in proportion to the benefits he receives from the public protection; the author contrasts this with the modern idea of progressive taxation which is based on ability to pay rather than apportionment. Finally, 3) equality of taxation: taxes had to be borne equally by all, rather than subgroups pushing the tax burden off onto other groups. Hayek pointed out the fallacy of assuming some sort of presumed justice in taxes; the author also cites 1950s-era 91% top tax brackets, and then 1986-era changes taking the top record down to 28% as examples of arbitrary ideas about "ability to pay."
285ff 8) Common sense economics: here the author argues that Enlightenment-era thinkers understood supply-side thinking: the idea that reducing taxes increases revenue is not absurd at all, in fact the idea goes back to antiquity. It rewards people for their industry; also on the Enlightenment ideas of "moderate" taxation would be shocking to us because 10% taxes on income in the 18th century were considered an outrage!
286 9) Adam Smith's four points on the marks of a bad tax system, from Smith's book The Wealth of Nations:
1) a bad tax was one that required a large bureaucracy
2) a bad tax obstructs the industry of the people
3) a bad tax encourages evasion
4) a bad tax puts people through "odious examinations of the tax-gatherers."
286ff 10) The author's final point here is on what a good tax system should be: he cites Lord Henry Home Kames' six rules from his book Sketches on the History of Man; this book greatly influenced Adam Smith who copied extensively from him.
1) when the opportunity for evasion exists, taxes must be moderate
2) taxes that are expensive to levy should be avoided
3) arbitrary taxes are "disgustful" to all
4) the poor should be relieved of any significant tax burdens
5) taxes that sap the strength of a nation should be avoided
6) taxes that require an oath are to be avoided
287 Final comments here on Henry David Thoreau who advocated civil disobedience, and was also jailed for not paying his taxes. The author mentions how the idea of limited government morphed into the wolf in sheep's clothing idea of "paternalism" in government; and ideas like revenue-sharing and social justice were used to justify the state taking away anyone's property under the guise of taxation. The author also notes that this paternalism idea found expression in its most brutal form in Italian Fascism, German National Socialism, Japan's Greater East Asia Policy, etc. Final comments about how we pay lip service to the ideas of the Enlightenment but basically all of our taxes fail Adam Smith's four tests.
Part VII: The Rocky Road of Early American Taxation
289ff On how after the American Revolution nobody wanted to create a national government with taxing power, but eventually it was obvious that as much as everyone disliked the idea Congress did have to have the ability to tax; the lack of this taxing capacity is why the government under the Articles of Confederation failed after just seven years: "all other considerations were secondary." Also in 1861 the South seceded and formed a confederation with a new constitution, likewise checking their government's power to tax; this was in part of reaction against Lincoln's high tax policy; the author argues that the slave issue was not critical to the Civil War, noting that even though Lincoln and the Congress said that slavery in the South would be respected, the South still would not budge from its secessionism. The southerners believed that Charleston, Savannah and New Orleans would replace the major Northern cities primarily because of low taxes.
Chapter 27: Tax Revolt in the Colonies
293ff "If revolution is the consequence of oppression, then the American Revolution should never have occurred." The author talks about how there was great freedom and opportunity in the Americas, the taxes the British were trying to collect around the time of the Revolution were modest and the money was to be spent in the colonies, the author asks, "Why all the ruckus and cry of tyranny?" and argues that there was no member of Parliament to represent the colonists, especially when arrogant bureaucrats sent from the mother country interfered in their way of life. "It may be said that the real cause of the American revolution was this lack of political machinery to protect the colonists' rights. The British Parliament was not designed to work for Englishmen living in faraway places." The author goes on to say how the American Revolution ended up being a radical solution because other colonial regions such as Canada and Australia found more moderate solutions.
295ff Discussion of the writs of assistance that were used in England to authorize a search for smuggled goods; the colonists in the Americas considered these to be monstrosities, and although they couldn't get the English courts to stop the use of them, in general the colony court systems would frustrate the process in the Americas such as they were not often used. Hatred towards this instrument of state search is what led to the Fourth Amendment barring unreasonable search and seizure.
296ff In the 1760s, after the British had pushed the French out of North America, the Parliament passed the Sugar Act; the author characterizes this as the Crown's first and only successful tax law in the colonies. New Englanders protested vehemently but this tax actually was quite modest, and the rest of the colonies didn't seem to have an issue with it. Also the protests were really against the administrative provisions that were designed to check evasion: in other words there was a maze of regulation that entangled all importers, which means any breach of even the most minor rule would lead to seizure of the vessel, including the personal articles of ordinary sailors. The colonists had objected to the presumption of guilt involved here.
297ff On the passage of the Stamp Act in 1765, causing mob violence to erupt in the colonies; this actually united the colonies in a way that had been impossible up until then. Basically this was a tax on newspapers, legal documents, business licenses, diplomas, etc., designed to pay for British troops stationed in North America. The author includes an exchange here as Ben Franklin was invited to the House of Commons to answer questions on the Stamp Act [this was long before he became radicalized in this conflict]:
Question: What was The temper of America towards Great Britain before the year 1763?
Franklin: The best in the world. They submitted willingly to the government of the Crown and paid, in their courts, obedience to acts of Parliament.
Question: And what is their temper now?
Franklin: O, very much altered.
Note the author citing a nuance here: that Franklin was a moderate at this point, he was speaking simply of internal taxes at the colonies, not on normal customs taxes which he didn't object to, nor did the colonies at that time. The Stamp Act was repealed, but in the repeal Parliament asserted that it had the power to tax the colonies if it wanted to.
300ff This was followed up by the Townshend duties: taxes on a relatively limited number of items from Britain: papers, dyes, glass, tea, etc., and also a requirement to quarter British troops in America. Rebellion against this act came from colonial merchants who boycotted British goods; the Crown had no alternative but to repeal these duties too.
301f Discussion here of three specific tax agents in Boston who were corrupt and who aggravated the people in Massachusetts--to the point where had it not been for these three guys there might not have been a revolution at all. The author writes, "the revolution was probably more the consequence of the oppressive administration of taxes than the taxes themselves, despite all the talk about taxation and consent." Also citing here Ben Franklin's article "Rules by Which a Great Empire May Be Reduced to a Small One," which the author calls the best summary of the sins of the mother country toward her colonies; written at a time when Franklin still had prestige among the British political establishment. In this article Franklin refers to tax officers who are "indiscreet, ill-bred, and insolent"; also comments on how the Navy scoured every bay, harbor, river, creek and cove to detain every ship and fisherman and turn their ships upside down on tiny pretense. Note also that British naval personnel got a share of any proceeds of confiscated ships, thus according to the author British warships in the Americas "were in effect given a license for piracy. Improper documentation was all that was needed to permit seizure; smuggling was not required." These various problems eliminated the colonists' distinction between internal and external taxes; instead they didn't want any taxes at all, and required consent for all of them, and thus this moved American thinking to limited sovereignty of the Parliament over the colonies. But Parliament demanded absolute power over the colonies and probably never would have surrendered its supreme authority.
302ff Clarifications on the Boston Tea Party [which like most US historical events have been propagandized and re-narrated beyond recognition from what they actually were]: this was not as most people believe a protest against British taxes on tea, but instead on the Crown's ability to monopolize the any given and thus undercut American merchants. If a monopoly could be granted for tea it could be granted for any other industry as well, this it was a sort of economic sanctions; also the author criticizes the wanton destruction of private property as the Boston merchants destroyed the British tea in the harbor, this was during and era when private property was held in great esteem. "The Boston tea party is a sobering event that raises difficult legal and moral issues. It is anything but the cause celebre American historians have made of it. This wanton destruction of property was not well received in the colonies. Massachusetts was a known seedbed of hotheads and warmongers. Franklin was shocked and he acknowledged that full restitution should be paid at once to the owners of the tea." Unfortunately Parliament then passed a number of "Intolerable Acts" which moved the entire conflict quickly towards war. The author talks about the criminal offenses committed on Loyalists during this period: their property was seized [ironic given that the colonists were angry at their property being seized], they were tarred and feathered; this created a long stream of refugees who fled to Canada. [I was personally shocked to learn that Thomas Paine actually was given a free home and 300 acres in New Rochelle for his service during the Revolutionary War, the estate was seized from a Loyalist. Once again: they don't teach this kind of stuff in the history books...]
304ff Final comments here on the Continental Congress which had become a joke by the end of the war, unable even to pay interest on its war debt or back pay for combat veterans. Likewise Parliament in 1778 enacted a law pledging to not impose duties taxes or assessments in any colony--unfortunately just a little too late. Even in colonies like Canada where Parliament had absolute sovereignty they still allowed local assemblies to consent to any taxation.
Chapter 28: The Tax Struggle for a More Perfect Union
307ff On the structural flaws of the Continental Congress: the federal government didn't have any ability to levy taxes or duties, it fells to the state level only. The thinking here followed the practice of the United Provinces of the Netherlands. All sorts of possible taxes were considered, but the Articles of Confederation were structured such that an amendment enabling taxation required unanimous consent, and Massachusetts was certain to veto any kind of taxing power of the federal government. The author paraphrases Sam Adams arguing the Congress would squander any tax revenues with reckless profusion [he wasn't wrong... this turned out to be of the more ruefully predictive sayings in American history]. Also on Robert Morris saying Congress "had the privilege of asking for everything" and yet the states were given "the prerogative of granting nothing."
308ff On the outbreak of Shay's Rebellion in Massachusetts, one of the three major tax revolts that plagued the nation during its first 15 years [also the Whiskey Rebellion and Fries's Rebellion]; this showed people the need for a stronger national government; Shay's Rebellion was against the spending and taxing powers of Massachusetts, consisting of war veterans and other have-nots reeling from taxes and debts imposed to pay debts from the war.
309 On the decision to try again and form "a more perfect union"; how the framers of the Constitution decided to define and control the taxing powers of the Congress. One thing was to make sure consent of the taxpayers was needed via their elected representatives; but also there was also a doctrine of "fairness" meaning one group couldn't adopt taxes that would burden some other group. Also interesting comments on how it was assumed that anyone who voted was by definition a taxpayer.
310ff A discussion here of the words "uniform" and "equal" used interchangeably in the Constitution; the author quotes some of the strongest Federalists making clear that all taxes should operate equally and uniformly; see for example quotes here from Alexander Hamilton and Noah Webster; see also The Federalist Papers where Hamilton included a series of essays discussing uniform taxation, the author also quotes certain Supreme Court decisions and state courts which were also governed by constitutions requiring uniformity in taxation. "As we shall see, the rule of uniformity passed away in the 20th century. You could tax one person's income at 90 percent, another at 70 percent, another at 20 percent, and another left altogether unassessed."
312ff Also on the framers desire to restrict Congress's ability to directly tax: see Madison, writing in Federalist #10. [Again we are verging into delusional Irwin Schiff territory here on some level: we can climb into the brains of what the framers "really wanted" and we can mine court decisions and constitutional language, etc., but the bottom line is what matters is what the current court system has declared and what the current legal/cultural milieu is. The IRS follows today's zeitgeist and it will put tax protesters like Irwin Schiff--who point to these old words, old cases and "the wishes of the framers"--and put them right into jail.]
313 Discussion here of what precisely is "direct taxation"; on the courts struggling to answer it even as recently as 1894, where the US courts reached a "confusing definition." Also on the modern difference between Canadian and British systems defining direct taxes differently from Americans; American legal authorities consider income taxes to be indirect; they are thought of as "excise taxes" on the receipt of income.
313ff Comments on other controls over runaway taxation: see where Article 1 Section 8 says Congress had the power to tax "to pay the debts and provide for the common defence and general welfare of the United States; the author again tries to "climb into the brains of the framers" to figure out what these terms mean; he argues the "common defence" was only for defensive wars not for aggressive wars, citing Hamilton's Federalist #34 talking about tying up the hands of government from offensive war: also on the general welfare clause which in those days had a quite specific meaning, which was the opposite of "special welfare," or, in other words, pork barreling, as the framers were realists about government.
315 Note this quote from Benjamin Franklin, as he signed the Constitution, saying "its complexion was doubtful; that it might last for ages, and involve one quarter of the globe, and probably terminate in despotism." [It is a melancholy experience reading quotes like these when, today, my country has become despotic in many ways.]
315ff On the Whiskey Rebellion, which erupted when Hamilton persuaded Congress to adopt excise taxes on whiskey; there had been whiskey taxes before the war, and this tax was needed to pay some of the country's war debts. Rumors spreading this was the first of many new excise taxes; that soon Congress would start taxing food and clothing. Also, it's important to note that on on the Western frontier [read: western Pennsylvania] whiskey was also a basic medium of exchange because money was almost non-resistant in the region, thus it was a tax on that region's "money"; and worse, the tax was payable in cash, not in kind, thus the government was demanding currency that wasn't really even available in the region in the first place. Also a proto-Internal Revenue Service was created here, as the country was divided into 14 districts, and each district director received 1% of the taxes collected, and each agent got 4% of the taxes collected, thus this was also a type of tax-farming too, pitting the revenue agent against the taxpayer. Protests were peaceful at first in 1792, but by 1794 the entire region burst into open revolt.
319ff As civil order collapsed in 1794, the Supreme Court certified the existence of a state of insurrection in Western Pennsylvania, and George Washington called out the militia from four adjacent states, leading these troops in "the first and only time a US president has assumed his position as Commander in Chief and led troops in the field, and full dress uniform." [Also note these comments about the gentle treatment of the rebels!]: The rebels surrendered and there was an agreement of amnesty and no one went to jail, and then Jefferson repealed the tax. [!!] The author mentions textbooks repeating rote praise of this "strong military action," citing this an important victory for the new nation, but it turns out that justice was on the side of the rebels, and "...the whole military operation was a political charade instigated by Hamilton to show the nation the muscle of the federal government." The author also asks if the tax would actually have been repealed without the violence in the first place.
320ff After crushing the Whiskey Rebellion, another tax revolt erupted by German settlers against a direct tax on land houses and slaves, the German settlers viewed this as the hated European hearth tax, and they armed themselves, seized tax assessors and drove them out of their counties. Their leader, John Fries, was actually convicted of treason and sentenced to death, although he was pardoned by President Adams. Adams' excise tax was hated throughout the country and Jefferson won the Presidency in 1800 in large part for his Anti-Federalist tax platform; the Federalist party faded from national leadership and disappeared from history. The author talks about how because of the Federalists, "taxation with representation had turned out to be even worse than taxation without representation." Also comments on how Hamilton's taxes and his approach to his work as Secretary of Treasury saved the new federal government but it destroyed the Federalist party in the process.
321 "We can now put into historical context Jefferson's comment that it was good medicine for government to have a rebellion every 20 years or so. And the course of his lifetime there had been almost a dozen rebellions he was acutely aware of." all of them tax revolts. The chapter ends citing Jefferson's reference to the Latin phrase Malo periculosam libertatem quam quietam servitutem. (Rather a dangerous Liberty than a peaceful servitude.)
Chapter 29: Was It Taxes, Rather Than Slavery, That Caused the Civil War?
323ff On the [widely propagandized] myth that the Civil War was all about slavery, the author refers to Lincoln's repeated comments during his campaign that he wouldn't interfere with slavery; his inaugural address where he stated this again "I have no lawful right" to interfere with the institution of slavery "and I have no inclination to do so"; Lincoln was also in favor of returning fugitive slaves [I didn't even know this last one]; on the illusory scope of the Emancipation Proclamation, which actually demoralized the Union army because it was so toothless; note the very striking footnote here discussing how the Civil War was between wealthy industrialists of the north and wealthy planter families in the south. ["The rich man's war and the poor man's fight."] Southern elites knew that their territory would become vassals to the North. How the Civil War hastened this vassalage; how Southerners mostly dominated American politics up until the conflict but then were hardly to be found among the ruling elite afterwards; the author calls this "the permanent price of the defeat that the South suffered in the Civil War."
325ff The author talks here about John C. Calhoun, an 1850s-era spokesman for the South, although not a secessionist, who articulated the South's key grievances: an imbalance of power, an overgrowth of the centralized federal government which would obliterate state sovereignty, and taxation, which harmed the southern plantation owners and enriched the northern manufacturing and commercial interests at the South's expense. The taxes were in the form of high import duties (tariffs) which cause Southerners to pay excessive prices for Northern goods and eliminated competition from Europe; see in particular the Nullification conflict in 1832 where South Carolina wanted to block new federal import duties, there was a compromise the following year to reduce these tariffs to a level South Carolina could live with. Discussion of the doctrine of Nullification which had a long history in the United States and was used in many instances in Pennsylvania, New England, etc. [Note the subtlety here is that one of the complaints of the South was the likelihood of retaliatory tariffs from Europe which would then harm Southern exports; but this fear actually never happened, because it just happened to be during a period of neoliberal free trade culturally throughout Europe; also the Europeans depended on exports from the South of products like tobacco and cotton.]
327ff The author goes over some numbers here, saying that the South paid about three quarters of all federal taxes, most of which went to benefit the North and Northern industry; it raised prices for Southern consumers: they could either buy European goods and pay tariffs or buy more expensive Northern goods--either way their money went to the North. "Southerners saw themselves as tribute-paying vassals of the north every time they bought Northern goods or paid import taxes."
328ff Note the very striking prosecution Lincoln directed at Northern Democrat Clement Vallandigham, subjecting him to a military Court and ultimately exiting him to the South; the author likens this to legal practices of the former Soviet Union against dissidents like Solzhenitsyn.
329 Also note the deep irony that the South quickly devolved into tax despotism as well, under the pressures of the war, impoverishing the people almost to the point of starvation with an extraordinary income tax, many people saw this as proof of Confederate despotism.
330 On Lincoln's platform, which called for a return to high import taxes, see the Morrill Tariff, "the highest tariff in US history," which was passed right away and signed by Lincoln in 1861: this doubled the 1857 tariff rates to 47% of the value of imported products. This was Lincoln's IOU to Northern industrialists and with this act he had closed the door for any reconciliation with the South. At the same time the Southerners were drafting their own constitution which had a specific provision banning high import taxes. [You can see pretty clearly that Lincoln was a sort of puppet of rich Northern industrialists; pretty gross on many levels.]
332 The author hypothesizes how it was that slavery came to be thought of as the "cause" of the Civil War: he cites intellectuals and writers who had no idea at all about the underlying economics; also John Stewart Mill, a leading English writer at the time, popularized the slavery aspect of the conflict; at the same time the Lincoln Administration bent over backwards to guarantee slavery.
333 Also on the "generation of idiots" who ran the United States in the 1850s after Daniel Webster, Henry Clay and John C. Calhoun had died off; this generation of idiots ended up starting a war; and then comments about how after the war ended slaves were even worse off. "Wars are not really fought to free some unfortunate minority not directly involved in a conflict." Note also the comments on the footnote on page 333 going over various examples of attacks on abolitionists and other evidence indicating that they were a small and despised movement throughout the North with no political clout whatsoever.
334 "The noble issues that both sides held up as the cause for their struggle remind one of the lofty purposes superpowers often profess in order to cover their imperialism. The point here is that the North did not go to war to free the slaves, and the South did not secede because of a trigger happy anti-slavery crusader in the White House." Interesting comment here also that basically the South could have seceded as long as it paid its taxes to the North which the author arrives at by reading between the lines of Lincoln's inaugural address.
336 The author quotes a pamphlet from a vociferous abolitionist from Massachusetts who, writing five years after the conflict, condemned the hypocrisy of the Civil War, saying that it wasn't fought to free the slaves at all. The author actually makes it highly compelling case here that tax policy--basically extraordinarily high tariffs--were the fundamental non-negotiable problem between the two sides!
Part VIII: The Monster That Laid the Golden Egg
339 Interesting comments here about when Romans and Egyptians took a percentage of the harvest this was an "income tax" but it was just at the gross production level, without any deductions for costs expenses--or heaven forbid a bad harvest. "A 10% production tax could easily have been a 20 to 50% income tax by modern accounting methods" Also comments on the first income tax in the late medieval period, circa 1404, that was seen as so abominable that all the tax records were obliterated; one early English historian said this tax should be concealed because it was such an evil. On the return of an income tax in Britain to meet the fiscal demands of the Napoleonic wars: this tax produced far more revenue than expected and thus was a "golden egg"; in the 20th century income taxes grew out of control, leading to Western democracies forming their own internal espionage organizations, not for political security but for "revenue security."
Chapter 30: The Tax That Beat Napoleon
343ff "Modern income tax laws come from the British Income Tax Laws of the Napoleonic era beginning in 1799." A back history of the French Revolution and how things got out of hand, the French National Assembly had no ability or competence in dealing with fiscal matters and couldn't collect any taxes, so it then stole Church lands and issued paper money based on these lands. [This paper money, the infamous assignats, quickly hyperinflated, as described in A.D. White's short book Fiat Money Inflation in France], Other European states began efforts to oust this new French republic; then power basically went to Napoleon; comments here on Napoleon's government struggling to figure out what and how to tax, and settling on land taxes, how his government constantly struggled with peasants burning down toll gates and customs houses; how he was unable to raise enough taxes to sustain his military adventures and tried to run his armies on plunder--which meant he could not sustain defeats. Essentially Napoleon ran costly military ventures without an adequate tax system, in stark contrast to Britain.
345ff Britain's first tries to support its war with France using its standard revenue devices, but these taxes were not enough; and thus the income tax was the only alternative because all the other taxes had been expanded significantly already. Comments here on Prime Minister Pitt, who introduced a large package of petty taxes called the "triple assessment" and how income taxes came in here sort of through the side door, because there was an option to pay an income tax of up to 10% in lieu of these other assessments; Pitt would have no idea that would end up being the most important tax invention in the modern world and within 100 years would be adopted by every major nation. Note also the Pitt's income tax was supposed to be terminated six months after the war ended, but instead it stayed in place as the government worked more and more bugs out of the system. By 1816 there was a large vote that repealed this income tax and destroyed all government records pertaining to it.
347ff Super interesting comments here on how a generation of Britons then had to die off before this tax could be reintroduced. [Absolutely fascinating how one could destroy records of a tax, and by doing so, inadvertently cause it to come back into existence... because nobody remembers. Unintended consequences...] Also on British tax theory in those days, which moved to more and more aggressive taxation, the author cites a "tax on knowledge" which was basically a tax to curb the press and could be used to close opposition newspapers via a stamp tax, thus it could be used to muzzle political opposition. By the mid-1800s the philosophy in England was that the country should have the smallest number of taxes producing the greatest amount of revenue, and thus Sir Robert Peel adopted a 3% income tax to be withheld at the source. This tax was also to be repealed as soon as government revenues were in balance; unfortunately this tax also produced 50% more revenue than was expected. "Peel had unearthed a pot of gold; there was little chance that would ever be repealed, and in fact, it never was." What followed was basically a growth in government and a loss of a sense of thrift in government expenditures.
351ff On how income taxes were a compromise between people's liberty and right to privacy, because many wealth taxes required inspections; see for example how hearth taxes required agents to enter homes, but these types of taxes usually enabled wealthy people to pay more relative to poor people; later also there was a notion that a nation's wealth could be best measured by its income rather than its land; it also was simpler and could replace all sorts of different customs duties, excises taxes and other types of taxes that required a lot of administrative time from the taxpayer as well as the government. Also there was a view that this income tax would remain at a modest percent; the author cites Edwin Seligman, a leading economic scholar, who wrote a major study on income tax [The Income Tax: A Study of the History, Theory, and Practice of Income Taxation at Home and Abroad] citing that the rate never exceeded 6% in over 100 years, thus rates would stay low, a claim that looks ludicrous and laughable today. [Talk about a pointy-headed intelleckshual who had no capacity for considering incentives nor any ability to perform second-order thinking!] The author goes on to cite various examples among Prussian income tax inspectors and the level of espionage that the Prussian government imposed on its own people: Seligman dismissed this as an aberration. The author writes "In short, the British invented the form of our modern income tax laws, but the Prussians gave us the muscle by which they now operate."
354ff Finally comments on France and how it had such revulsion against taxes, specifically income taxes, that it fought off any and all income taxes until World War I; but from WWI on the French system looked just like the British system.
Chapter 31: Scaffolding for Plunder
357ff Back to 1894, when Britain adopted death taxes with progressive rates, and the US adopted an income tax, this led to gradual use of progressive rates for all income taxes everywhere. "The taxing habits of civilization would never be the same again." On two types of death taxation, inheritance taxes and estate taxes: an estate tax is levied against the estate with little regard for the beneficiaries, while an inheritance tax looks at the beneficiaries and taxes them at varying rates depending on their kinship to the deceased. On the modern inheritance tax, which is derived from the Dutch (who derived theirs from the Romans), where children and wives were exempt, and rates graduated for more distant relatives, peaking out at 30% for strangers. These taxes were also popular in the Middle ages where a 25% estate tax was not uncommon against a wealthy Jew; also peasants would give their lords the best cow when a member of their household died, although usually it was given back as a gesture of goodwill. Also on how modern estate taxation can be traced to the Stamp Act of 1694, because legal documents required stamp taxes, and for executors of wills this stamp tax basically evolved into an estate duty.
358ff On various tactics to escape the estate tax: like taking up residence in a tax haven like Monaco or Jersey; also in the United States, private foundations were a favorite tax avoidance technique, the foundation allowed heirs to manage the holdings for charitable purposes but with a great degree of latitude. This later led to Congress passing laws in 1969 regulating private foundations such that they have to act like public charities.
359ff Comments on how, initially, when income taxation was put in place, a single rate had to be used otherwise it would never have passed in the first place, in part because of reasons of uniformity/equality, but also because it was obvious that imposing progressive rates would require governmental prying into peoples' financial affairs, something no one would agree to. Comments here from a former Chancellor of the Exchequer who was concerned that graduated rates would become a "scaffolding for plunder." On 1910, when Lloyd George persuaded Parliament to introduce a super tax on incomes over 5,000 pounds, arguing that it was not oppressive; also on how in the USA people used the language in the Constitution to fight the 1894 income tax, even though it was a 2% tax on income over $4,000. Note that a $4,000 exclusion (in those days) would mean 98% of people wouldn't be taxed. [But once the camel's nose got into the tent...]
360ff Within a year a court challenge on this tax went to the Supreme Court: Pollock v. Farmers Loan and Trust Co.,; this is a celebrated case, debating whether a special tax could be directed against a small minority within a country, the long-range consequences were obviously significant and one lawyer actually argued if the rate were 2% today it could be 20% tomorrow. Note here how the author rather mirthlessly writes "No one suggested it might be 91% tomorrow; that would have been laughed out of court as absurd." [But of course that is exactly what happened, and it was only a matter of a few decades before it did.] Also there were questions about the equality of this tax, but the Court ruled that it was a direct tax and therefore unconstitutional and thus did not rule on the equality issue.
364 On the 16th Amendment, passed in 1909 in Congress and ratified in 1913, enabling Congress far greater freedom to tax incomes and also eliminated the "apportionment" requirements to the states. [How very interesting that this is the same time roughly that the Federal Reserve system, the "Creature from Jekyll Island" came to life. These two things basically permitted gigantic growth in the Federal government and led to tremendous centralization of both money and power.] The context here was this change to Congress' taxing power came with assurances that rates would never exceed a few percentage points. Also, note this quote: "The income tax of that day consisted very much of an honor system with rates that were fair and reasonable for all. The America [of those days] wasn't trying to police the world or fight offensive wars; nor was it trying to tax and spend itself to death." See also how Madison predicted this outcome in Federalist #10 that in a democracy the majority would overtax the minority; the framers thought they protect against this with the constitutional provisions for apportionment and uniformity. Madison actually spoke out directly against progressive rates. Finally, the author mentions that the 7% "top rate" in 1916 ran up to 90% [!!] within the next 30 years.
367ff Discussion of various aspects of shifting tax burdens to others; on the tyranny of the majority, imposing taxation on the few. Note the quick joke author inserts here about a man complaining about a boil on his nose; when his friend asks him "Where else would you want to have it?" The man thought for a while and said, "I'd like to have it on some other man's back." The author shares other examples of tax burden shifting from the majority to the minority, including when Christians would tax Jews at four times the Christians' rate; the author argues that progressive tax rates are basically the same idea.
368ff Comments here on how the Supreme Court simply hand-waved away the constitutionality question on progressive rates once the 16th Amendment went into effect and the first income tax laws were passed; the court disposed of the question with more or less a one-liner saying that claims of unconstitutionality were in "absolute want of foundation in reason." And that was it! This dumbfounded legal scholars all across the country in that it didn't address any question of equality or uniformity demanded by constitutional principles. Note also at the same time a bunch of state courts had rejected progressive rates based on these very issues. On how constitutional experts, even in the 1950s, some 40 years later, were still castigating the Court for this 1916 decision. The author finally argues that these Court decisions were basically political decisions in keeping with a temper of the times; everybody was filled with anger towards the so-called "robber barons" of the era: the Vanderbilts, Rockefellers, Astors, etc., who were extremely unpopular. "A few years before, the court had no trouble reconciling racial discrimination with equality [referring to the separate but equal doctrine], so reconciling wealth discrimination with uniformity was achieved with ease." [I think another takeaway here is that the court system can twist things quite extensively in order to reach the conclusion it wants to reach; it is an occasional brake on the system, it won't put it into reverse; note also Murray Rothbard's observation that the court system is just another extension of state power: "There is no such thing as an umpire outside government."]
Chapter 32: How a Good Tax Goes Bad
371ff Here the author shares various political cartoons expressing hatred of the tax code and of tax agents; the author's tone here becomes a bit rueful as he cites how Benjamin Franklin called for rebellion against "insolent" British tax men "whereas we make a joke of such matters" today.
375ff The author makes four assertions here of what future historians will find when they look back on the taxation policies of our era in the United States. starting with: 1) That the taxation system lost consent. The author discusses here various tax resistance maneuvers, for example in the 1970s many Vietnam draft resistors and protesters also decided to resist taxes by not paying money to a government they objected to; see Karl Hess and his book Dear America; Hess moved to West Virginia and earned his living through barter, Thoreau style. The IRS organized a full scale attack on tax resistors and put many of them in prison, the author also notes that the federal judiciary is very sympathetic to the IRS and its prosecutions.
380ff Interesting comments here on the quick increase in progressive rates, which started at a 7% maximum, were raised to 15% the next year, and then were raised to 67% and then 77% by 1921 [!!!]; when these ultra-high rates hit, the highest incomes quickly began to disappear, the author shares certain numbers here where in 1916 the treasury reported 206 incomes above $1 million when the rate was 7%, but at 77% in 1921 there were only 21 filers with incomes over $1m; the author says 9 out of 10 million dollar earners had "vanished," arguing this is a vivid example of the tax rebellion of the rich; they may have left the country or arranged their financial affairs so their taxable income was lower. "The 90 percent of million-dollar earners who disappeared simply expressed their non-consent by voting with their shoes or their wits." The author also cites the next tier of income levels, between $300,000 and $1 million, that were also down 80% over the same period. The author just gives this as more evidence that taxes are no longer levied with the consent of the taxpayer.
382ff 2) The author argues that future historians will find that our tax system was a pocket of tyranny in an otherwise free society: the author argues that in the early decades of the tax system it was a voluntary or honor-based system, but now all taxpayers are under surveillance because of the strong inclination to evasion; in other words there's a literal cold war tax rebellion, and without force and spying the the revenue system would probably collapse; note that the 1950s banks did not report customer banking information to the IRS at all; real estate transactions weren't reported to the IRS; stocks sales and dividends were not reported, even independent work was not reported [like it is today on a form 1099]. Only wages were reported and that was usually so the taxpayer could claim a refund. US customs didn't require a declaration of the amount of cash you carried with you, nor did it confiscate amounts in excess of the permitted limits; all of these domains were initially "honor systems" but there's been a constant erosion to this honor system to the extent that now everything is reported to the tax authorities under an avalanche of tax surveillance legislation.
383ff 3) The author argues that future historians will find that we terrorized taxpayers with brutal punishment: on the legal distinction between crimes that were "real crimes" and those manufactured by the state; note that the major tool for control over all citizens in the Soviet state, for example, came from fiscal crimes; the author argues that it's similar now in the United States: just like in the Soviet system, because of the incredibly complex system of rules and regulations, most citizens are in a literal state of illegality and are always arrestable; how are tax bureaucracy is indeed like a miniature Soviet state with the power to intimidate anyone and everyone because of these synthetic crimes; the author cites how tax evasion convictions in the United States occasionally produce barbaric and unequal punishments, citing three tax evasions cases of roughly the same amount of money, where one woman was jailed for 30 years, yet for a tax case of a similar amount Leona Helmsley's was jailed for four years, and Sophia Loren was given 30 days in home confinement--all for similar-sized tax evasions. The author also quotes an IRS agent who revealed inside stories of other agents gleefully intimidating citizens.
387ff Finally, the author argues that future historians will find that 4) taxes are administered through a massive system of surveillance. [Today's modern panopticon surveillance state would be beyond the author's worst nightmares.] The author argues the aggregation of laws created to enforce the tax system destroyed our financial privacy, he cites the Bank Secrecy Act [yet another of a long list of laws that mean the exact opposite of their names], where anyone's bank account can be available for the government to examine, as something that the author argues no other country in the free world does. And then the author cites a [highly sobering] tax case in Sweden involving the filmmaker Ingmar Bergman, who was arrested suddenly while directing a motion picture in 1976, taken to Swedish tax investigation headquarters and interrogated for hours; he was so upset that he actually spent the next few days in a hospital, and then he fled into exile shortly after. The Swedish press investigated this and found that many other Swedish citizens were treated in the same fashion; the government that had been ruling Sweden for 30 years was driven out of office over this controversy. [The prescient book Perpetual Traveler is filled with warnings about how nation-state governments ironically tend to be most adversarial with the very citizens they are supposed to protect.]
391 Finally, interesting comments here on the USA's entry into World War I, financed by a war tax, and according to Edward Luttwack [author of yet another predictive book: The Grand Strategy of the Roman Empire From the First Century A.D. to the Third] the USA's entry into this theatre disrupted the natural European outcome of a compromised peace, and thus actually led to indirectly the conditions of World War II; also the author notes the various sedition charges brought in the USA against people who opposed the US entry in World War I; hundreds of people were convicted, some for prison terms as long as 20 years. "Free speech in America was in a dark age at this time." The author likewise argues that Vietnam was also made possible by the gigantic tax engine of the US government. "Taxes, then, If they raise great revenues, enable a government to do many things, including foolish and destructive things." [Once again, this author would shudder with horror at today's "endless war" policy, shared by both parties.]
Chapter 33: The Artful Dodger: Evasion and Avoidance
393ff Cute anecdote about a museum of tax avoidance and evasion in Rotterdam; the author says how it seems fitting that the Dutch have such a museum, since tax evasion and tax avoidance have a long and even honorable history in Holland; see for example how Napoleon set aside special docks and wharfs at Dunkirk to accommodate British smugglers; also comments about how smuggling and concealment along the coast of Europe operated on a grand scale for centuries; the author cites couple of different interesting-sounding books on the topic: Duncan Fraser's book The Smugglers and Henry Shore's book Smuggling Days and Smuggling Ways.
395ff American tax schemes are starting to look more and more like European tax schemes, but yet it is extremely difficult to find forthright discussions on tax evasion, as the media uniformly presents the tax bureaus here as tough but fair, the author likens it to news reporting during wartime in that the media will always be regime-compliant. On how when government tax bureaus have totalitarian snooping powers, they will use those powers to snoop into citizens' financial lives; the governments will use those tax proceeds on things we don't approve of like stupid wars; this is precisely what the Founders tried to prevent in the Constitution. The author cites widely-reported examples of murders and beatings of tax collectors in China under Communism [!], including one instance where four tax collectors were stuffed into a pigpen by a group of pig farmers. Also an anecdote here of two recent Russian immigrants who had established successful lives in the United States but complained angrily about the IRS, stating that even in Russia there was not such an operation that could take half of what you earned. [The author's point here is to show that tax rebellion is the normal state of things and that even in repressive systems there is more freedom from the tax man than here in the USA. I think another sarcastic way to put it comes from a meme I saw recently on Twitter: The USA fought communism for 75 years, only to create a fake and gay version of it here at home.]
398ff On how the modern tax system in the United States is basically evasion-proof, largely because of tax withholding and other methods. The author criticizes the fallacy that if you evade taxes you somehow force honest taxpayers to pay more: this can't be true because your rates don't change; this might have been true in ancient Egypt when every village had a collective tax obligation; also when it comes to government spending expenditures always rise to meet income: the author quotes C. Northcote Parkinson from his book Parkinson's Law.
400ff On how basically fear and compulsions sustain our tax laws today; how the tax code and its complexity has given birth to an industry of lawyers and accountants who move into the business of tax planning; the author walks through a simple, useful example of someone with $10 million who could invest their money at interest (taxable at the highest rate) or they could invest it into gold, stocks, etc., generate no income, and only pay taxes on capital gains if and when they sell. [The author's point here is that wealthy people have tremendous flexibility in how they structure their investments, and so they can and will react to the tax code.]
Chapter 34: Flight to the Havens: The Offshore World
405ff Quick history of the Cayman Islands, which broke away from Jamaica when Jamaica was seized by deserters from Cromwell's army from the Spanish; it was an undeveloped swamp basically until 1960 when it began its journey as a tax haven; today hundreds of banks operate there; the Caymans modelled after Nassau in the Bahamas, with streamlined banking and trust laws; the tax haven brought incredible prosperity to the Cayman Islands; see also Lebanon which used to be "the Switzerland of the Middle East" in the 1960s, with a great banking center in Beirut, but the Lebanese literally blew up their reputation and status because of all the war and instability there [not to mention the recent events in Beirut, where the banking system collapsed, froze customer assets, and the currency collapsed some 98% since 2019, triggering a hyperinflation]. Also comments on how the American colonies were originally a tax haven for overtaxed Europeans; the author argues that more people came to the colonies to escape taxes than for any other reason. Note that the United States offers non-resident foreigners lower taxes on interest and capital gains taxes than its own citizens. [I had to look this up to see if it was true... and yes, it is: 0% taxes on interest and capital gains for non-resident foreigners. Once again, governments will often treat their own citizens worst of all.]
411ff Comments here on capital flight, something that's normal in a world of high tax rates, capital controls and exchange controls. Also capital flight happens to escape government audits and snooping into individuals' banking and accounting records reviewed by their governments. Also a cute anecdote here about how the Rolling Stones left England in the 1970s because of the UK's incredibly high tax rates; the author uses this as an illustration of how the Laffer curve functions. [There is much more discussion of the Laffer curve coming up in the next chapter, Chapter 35.]
413 Discussion here on how the US wants the capital from places like the Caymans, these banks store their investments in the US, which is why the US permits American banks to have offshore branches, which cycles dollars and capital back into the United States via these tax havens. Also on how the US actually supports exchange controls in other countries because this keeps dollars and capital in the dollar system, restricting the conversion of local money into foreign currency and instead keeps it in dollars. [Note that stablecoins are likely to make the dollar hegemony system even more powerful and robust; it well may give extra decades of life to the dollar system.]
415ff The author goes through some different techniques that are used to ship wealth out of adversarial jurisdicitions into friendlier, tax-haven jurisdictions: "The Jamaica Shuttle": as actual planeloads of cash flew out of Jamaica for Cayman within hours of the Jamaican government putting in place tough exchange controls; "The Leaky Scow": this technique involves buying some sort of rundown asset [like an old tramp ship)!], but pay a full price for it; the seller then deposits the majority of the payment into a tax haven bank; thus this is a way to get assets out of the country; "The Stamp Collector": this was a technique used in England before the Thatcher government got rid of exchange controls; you buy a valuable stamp and then send it to a foreign country where it is sold for hard currency and then deposited in that Englishman's tax haven account; the author gives an example here of stamp prices in London trading much higher than stamp prices elsewhere in the world because of all the British citizens competing with each other to get capital out of the country; but then when exchange controls were repealed London prices for stamps reverted to world prices. Finally, on "The Soviet Caviar-Mackerel Switch"; a group of entrepreneurial Russians shipped caviar overseas labeled as "mackerel" with invoices to match, the buyers would sell the caviar at caviar prices and transfer the difference into Swiss accounts in the Russians' names. This was actually conducted by the Fisheries Ministry, and the group was caught when a clerk accidentally shipped "mackerel" to food markets in Moscow where Russians were able to find caviar at mackerel prices by accident; the head man of this scheme was executed supposedly.
Chapter 35: The Miracle Economies
419ff Thoughts here on the "miracle economies" of Japan, Hong Kong, South Korea, Taiwan and Singapore, with various approaches in governance: some with great government involvement in business some where the government simply financed businesses; others that were fully laissez-faire; but all of these countries had in common: low tax rates and tax policies that favored business. The author argues this replicated what the United States did in the 19th century and before, as the USA attracted business and produced significant income growth as a result of being a favorable jurisdiction compared to Europe. It's an interesting argument here: there was no one government business policy necessarily that caused the "miracle" but one thing all these countries shared was low taxes.
421ff On Hong Kong, which was set up as a free port for Asian trade; the city went from a practically barren island to one of the world's largest ports. On how it went through a big downturn after Japan occupied it during World War II, but after the war--and even though England began experimenting with socialism back home--Hong Kong remained a low-tax, free market environment that benefited enormously from Chinese fleeing the mainland under Communism; basically Hong Kong ran itself as a laisse-faire system when laissez-faire capitalism was seen as outdated in many other countries in the world.
424ff On Singapore, originally a socialist system; Singapore offered 5 to 10 years of tax immunity to foreigners who set up export and manufacturing businesses, and then extended that tax immunity permanently if earnings were retained and reinvested in Singapore. On Taiwan, which initially experimented with government ownership of shipbuilding and steel industries, but then embraced a low tax/low interference model as well, permitting 100% foreign ownership etc. South Korea saw this and copied it as well. [I think it's worth remembering that these countries, Japan included, basically were all literal dictatorships or de facto one-party states during these decades; it somehow seems easier to set laissez-faire capitalism in place when you don't have to deal with voting, opposition parties, etc. And then it's also worth considering the catastrophic demographic outcomes of many of these countries as well during these countries' current periods of more oligopoly/monopoly capitalism.]
425ff On Japan: background on the mini-tax revolts that happened in the Tokugawa period, before Japan opened to the West; the author mentions that recently the party ruling Japan suffered its first defeat after proposing a 3% sales tax; on the close working relationship between the Japanese government and the business sector, something common to all the Asian tiger economies in those days; when Japan was occupied by the US it was subjected to the same progressive income taxes that the US used, but as soon as the government was able to, it lowered or eliminated most of these taxes, eliminating taxes on interest, limiting the capital gains tax, etc. Note also the interesting discussion here about Japan's Postal Savings system, where the banks and the government do not know the identity of the account holders [I had no idea about this aspect of this system], there was an effort in 1982 to crack down on these and impose identity cards, but the law was withdrawn after the people objected; these accounts can be held with fictitious names or identities; The author describes these accounts as a check on government taxing policies because if rates get too high capital will move into these accounts.
426ff Interesting comments about savings rates in Japan: how pre-World War II Japan had savings rate comparable to the US; today the author claims Japan's high savings rate is due not to some cultural propensity to save but in reality because interest income is tax-free.
427ff The author points out that the Asian businessman knows his government is trying to help him and wants him to prosper, in stark contrast to the American businessman who "knows no such thing": no political party wants to help the business sector and usually one political party actively wants to harm it. On how even tiger economies were practicing Reagan supply-side economics long before Reagan was.
429 The author contrasts the Asian tigers to Israel; it came into existence at around the same time as the Asian tigers and had as much or more going for it; the author argues it should be the most prosperous country on Earth given the devotion of the people arriving to it, comments on their embracing of socialist policies, how net immigration is now negative, on their use of excessive and dumb taxes which are disincentives, the country's state-owned enterprises are inefficient, etc. [The author doesn't talk about their incredible inflation problem during these decades as well]. The author claims the founding fathers of modern Israel immigrated from Eastern Europe with the religion of socialism, believing the country could be directed by "wise bureaucrats."
431ff Finally a discussion of the Laffer curve, and a graphical rendering of it here. The author offers a notion derived from the Laffer curve that there are two rates of tax that can be used for generating the same amount of tax revenue: a high rate or a low rate. The author gives the example of the tax rates used in 1916 and 1921 in the USA, one at 7% and the other at 77%, where they collected about the same amount of revenue. The idea here is once again that people--especially wealthy people--can respond and react to tax rates.
Chapter 36: What Constitutions Are Supposed to Do
435ff On James Madison talking about the dangers in democracy of the majority overburdening the minority with great taxes, saying in Federalist #10 that "enlightened statesmen will not always be at the helm." On how Americans during the 20th century essentially lost their constitutional protection against high taxation; although certain states still follow their constitutions and actively protect taxpayers. "As early as the 1950s, legal scholars were resigned to acknowledge that federal tax legislation was no longer subject to any constitutional challenges."
436ff The author describes three primary devices in constitutions that lead to protection of taxpayers: 1) the need to separate the power of taxation from the power of spending, something that has been lost in most modern economies. The author cites the British system before Parliament became all-powerful, where taxing and spending were separated one was held by the Crown, the other held by Parliament. The author also cites Gorbachev's short-lived government where the Supreme Soviet actually rejected the government's plan for high income tax rates (the top bracket was going to be 55%) because, the author thinks, the Supreme Soviet didn't actually have the power to spend; it also shot down luxury taxes on cigarettes caviar and other luxury food items.
437 2) The Swiss System: The second constitutional method, which the author calls the Swiss system, involves taxes put directly to the people for a vote. The author contrasts this with the USA's representative system where taxes are passed by representatives, or as the author calls it, the peoples' "vicarious consent." The author makes a point here that this type of Swiss system operates on a partial level in the USA as there are state and local government levels where voters do approve taxes and spending.
437 3) Constitutional controls: the third device according to the author is actual constitutional controls written about taxing and spending; he notes that the controls written in the USA's Constitution have basically failed now.
439 Interesting section here describing a federal judge who "foolishly thought the uniformity clause still had some force" but his decision was slapped down by a unanimous Supreme Court decision, saying such a tax would not be unconstitutional; in a footnote here the author cites the case: U.S. v. Ptasynski, 1983, and writes, "it is interesting that under the federal rules of procedure there is an automatic appeal to the Supreme Court whenever a federal tax statute is declared unconstitutional. Hmmmm?" [To put it cynically, the way to upend constitutional protections like these is to make sure you have procedural plumbing already set up to get the results you want, it doesn't matter any more what some rotty old piece of paper says.]
439ff Comments here on California's Proposition 13, a state constitutional amendment that set limits on real property tax rates, which was not anticipated by governments or even the press; its leader was dismissed as a crackpot; but it resulted in a landslide victory and had repercussions all over the world; most of the homeowners in those days weren't greedy, wealthy people as presented by the press or government; they were just regular homeowners trying to keep their homes after property taxes escalated far faster than peoples' wage growth.
441 The author argues that if we do ever want to resurrect the principle of constitutional control over taxation as the framers intended, all you have to do is bring back the uniformity clause which would eliminate tax immunities for some and confiscatory rates for others. [Of course legally, philosophically and culturally we are so far away from this that it doesn't seem conceivable anymore, likely the entire edifice will have to be replaced.] Interesting comment here about how we would never imagine giving certain people immunity from criminal law but we tolerate immunity on a grand scale when it comes to tax law; this is just like people trying to obtain noble status in France to evade taxes, as today specific groups would seek protection or exclusion from the tax code through the political process. He also thinks we should return to the traditional curbs on Congressional spending by reviving "general welfare" and the "common defense" clauses. [Again this is sadly delusional in the modern era where we foment wars everywhere and spend recklessly.]
443ff Interesting comments here on the so-called "reasons of state" doctrine: in US history this this refers to Hamilton's concern that the Constitution tied the hands of government from engaging in an offensive war founded on "reasons of state," a concept that goes all the way back to the Greeks, when Sparta went to war against Athens in a preventative war to check the Athenian Empire's growing power; of course "reasons of state" could be used to justify the Vietnam War because it was allegedly a preventative war against Communist expansion. [In other words, cynically, "reasons of state" are just whatever reasons are made up justify whatever the state wants to do.] "The US government can engage in all the wars it wants to with congressional permission. What it can't do is use tax monies for such purposes. That is why Hamilton used the term tying up the hands of government, i.e., prohibiting the use of tax monies for such purposes. The fact that no US government has seriously wrestled with this issue would suggest that no US government has been aware such a prohibition exists." [Again, cynically, why would you want to be "aware" of a prohibition you have no intention to honor?] The author concludes this chapter mourning the fact that most of the constraints on the federal government set forth in the Constitution have been either removed, ignored or exploited through loopholes or creative interpretations from the Supreme Court. The author quotes W.C. Fields when his friend asked him why he was reading the Bible: "Looking for loopholes," Fields replied.
Chapter 37: Learning from the Past
447 The author paraphrases Polybius here, saying the best preparation for politics was the study of history in order to avoid the disasters of others.
449 Note the footnote on page 449 citing the US v. Kilpatrick case (1984) as an illustration of how pro-government and pro-IRS the Supreme Court is, as here it took a criminal indictment obtained by fraud and perjury, and reversed the trial court's decision to throw out the case, letting the indictment stand; eventually when the case went back into the trial court that federal judge wasted little time throwing the case out because there was never any tax evasion in the first place.
451ff The author gives a list of 27 maxims that he considers the most important from this book. Some of the ones that stood out to me:
* Many great nations tax themselves to death and many nations became great because of the right kind of taxation.
* Whatever is taxed must be surveyed; consequently, if a tax system is all-encompassing, liberty must give way.
* Taxation vests enormous power in the tax bureau, which tends to overpower not only the taxpayer but other branches of government.
* The ancient Greeks discovered that tyranny is the product of the wrong kind of taxation, especially direct taxation.
* Consent is required for all lawful taxation; without consent, rebellion and civil disobedience are justified.
* Banking privacy is one of the cornerstones of liberty.
* Taxes are more often than not the cause of revolution.
* Governments will try to retain their newly enlarged taxing powers that they impose during wartime.
* As taxation increases evasion increases.
* Great wealth disappears when governments adopt taxation to soak the rich the: rich have always had the means to escape heavy taxation.
* People tend to resist heavy taxation in the following ways: first, lawful avoidance; second, if avoidance fails, then either evasion or flights to avoid tax; third, rebellion; and finally, when there is no other alternative, they have accepted serfdom when it offered the only relief from outrageous taxation. [This is a particularly interesting one]
* Liberty tends to carry the seeds of its own destruction, for freeman will often grant extensive taxing powers to their governments, not realizing that those powers will, if carried to excess, destroy the very liberty they sought to preserve.
454ff The chapter ends with the author expressing his concerns about the increasing surveillance of citizens in the modern state, speculating that we could find ourselves in a state of neoserfdom in the modern state. [Eat your bugs and live in your pod, plebe!]
Chapter 38: Taming the Monster
457ff The author goes through various ideas for taming the monstrous tax bureaucracy and tax infrastructure in the United States, starting with separating the power to tax from the power to spend, and bringing back constitutional controls to limit the abusive behavior of the IRS; he cites various books and national news segments and news articles describing accounts brought to public attention of various acts of abuse and misuse of the tax system by the state as well as abusive behavior by IRS agents. Other ideas the author has include establish a crime for tax extortion as well as allowing civil action for damages against tax authorities; he cites Roman laws which punished tax collectors who exceeded their authority or collected more than the law required.
461 On the author's wish to establish civil action for damages or tortious tax administration, including malicious tax investigations or leaked information; he cites how it's become widely known that the executive branch has used the IRS to harass or even destroy businesses, individuals or unpopular political organizations, as well as even congressman and senators. Presidents Roosevelt, Kennedy, Johnson and Nixon were the most conspicuous abusers. [Some disturbing stuff in here!] Kennedy went after right-wing Christian ministers who criticized his Catholicism; Johnson went after everybody in the Goldwater Administration (the author quotes another writer saying "the right of the victors is to audit the losers"); Nixon used the IRS to purge his enemies.
461ff Even more sobering is what the IRS itself will do to people it doesn't like; the author cites Senators Edward Long and Joseph Montoya, who sought to have a Senate hearing on IRS misdeeds, but were silenced through the leaking of information from their taxpayer files [!]. The author cites a tax case where an associate who was unwilling to cooperate was indicted along with the target, although there was no cause in the first place and it was promptly thrown out. [Shades of the SEC here: they start in on the junior people and try to intimidate them into cooperating to help nail the senior guy]. The author has an interesting idea here that every IRS district should coincide with every congressional district and a congressman should be act able to act as a "censor" for constituents against the tax system.
463ff The author suggests that tax debts should be disputed just like any other debt; the tax collector should not be given extraordinary rights above other creditors. The author explains here how the entire legal apparatus of taxation is completely different from our typical understanding of the "innocent until proven guilty" kind of approach of the regular court system; for example if you want to go to a regular court to dispute the tax bureau, you have to pay your tax debt first and then sue the government to get your money back; also you are unable to enjoin the collection of an illegal tax; bankruptcy offers no relief to tax debts; there are often enough penalties that they can exceed the taxes owed, and the author writes "These penalties add a kind of audit-terrorism to the system." The author cites how the British government, prior to the American Revolution stacked the deck against the colonies in favor of the British tax bureau by taking all tax cases away from the local colonial courts and transferring them to the British admiralty courts in Halifax, Nova Scotia.
465ff Other interesting [and delusional] ideas like decriminalizing the tax law; the author makes the argument that only tax fraud is a crime, tax evasion is not. He writes that everyone is in a constant state of illegality because of the incredibly complex and incomprehensible tax law.
466 The author thinks congressman and federal judges should be immune from the IRS: this would enable fairer tax laws and fairer administration because lawmakers in the judiciary would be immune from intimidation or undue influence from the tax bureau. The author sites congressman George Hansen of Idaho who published a book containing misdeeds of the IRS, many of which he writes were "beyond belief." Hansen was subjected to a whisper campaign; other comments here on how in general congressmen are terrified of the IRS; likewise the IRS has apparently attempted to impeach or destroy judges, including judges on the Supreme Court during the 1960s. The author thinks that judge immunity from the IRS would give taxpayers more equal standing in the court system.
468ff Finally, interesting comments on how making our tax system as indirect as possible, collecting income at the source and at a flat rate, so that almost nobody would have to file. [Sadly this just reveals the system's perverse incentives: since there's already a gigantic industry of tax preparation companies, service providers, accountants, etc., we've created a symbiotic class that "needs" the tax code to remain complicated so they can continue to live off of it.] Also capital gains and property sales could be taxed at the source, like a sales tax collected on the time of transfer, rather than imposing a capital gains tax based on cost basis records.
Epilogue: The Foursquare
473 The author share some of his central principles, incluing the glaring fact that all good tax systems tend to go bad, governments are unable to live within a good, working, moderate tax system, and they tend to be spendaholics; we've also become self-destructive in how we tax ourselves, violating the rules our forefathers of warned us about; on the idea that all good tax systems are based on moderation.
474ff The author offers a "Foursquare" model balancing rates, equality, intrusions and penalties in a tax system, encouraging a virtuous middle among these four aspects. He argues that today our system has too much emphasis on intrusions and punitive provisions that are out of step with a free society; also on the idea that vicious extremes tend to feed on each other: excessive rates require extensive surveillance, intrusions and harsh punishments.
To Read: [I'm grateful to this author for a wonderful (and massive) list of books to read!]
Michael Grant: The Ancient Historians
A.H.M. Jones: The Roman Economy
Adrian Koch and William Peder, eds: The Selected Works of John and John Quincy Adams
"Diogenes": The April Game: Secrets of an Internal Revenue Agent
Suetonius: The Lives of the Caesars [trans. J.C. Rolfe]
Josephus: Wars of the Jews [trans. William Winston]
Josephus: Antiquities
Michael Rostovtzeff: The Social and Economic History of the Hellenistic World (3 vols)
Michael Rostovtzeff: The Roman Empire
Caroline Webber and Aaron Wildavski: A History of Taxation and Expenditure in the Western World
Cicero: On Duties (from Cicero's Selected Works, trans. Michael Grant)
Aurelio Bernardi: The Economic Problems of the Roman Empire at the Time of Its Decline
Charles-Louis Montesquieu: Considerations
Charles-Louis Montesquieu: The Spirit of Laws
History of the Patriarchs of the Coptic Church of Alexandria [annotated by B. Evetts]
Roy Cave and Herbert Coulson: A Source Book for Medieval Economic History
Ian Grey: The Horizon History of Russia
Bernard Pares: A History of Russia
James Mavor: An Economic History of Russia
R. Trevor Davies: The Golden Century of Spain
Martin A.S. Hume: Spain: Its Greatness and Decay 1479-1788
Eric Wolf: Sons of the Shaking Earth
Nigel Davies: The Aztecs: A History
Nancy Mitford: Frederick the Great
G.R.R. Treasure: Seventeenth Century France
Edward Hughes: Studies in Administration and Finance 1558-1825 ["Excellent discussion of the salt tax debates, harshly critical of Walpole."]
J.H. Plum: Sir Robert Walpole (2 vols)
Charles Wilson: The Dutch Republic and the Civilization of the Seventeenth Century
***William Danforth: I Dare You
Albert Jay Nock: Our Enemy the State ["remarkable"]
Henry Home, Lord Kames: Sketches on the History of Man
Eric Hoffer: The Passionate State of Mind
Ellis Paxson Oberholtzer: Robert Morris: Patriot and Financier
*** Benjamin Oliver: The Rights of an American Citizen ["a remarkable book"]
***Thomas P. Slaughter: The Whiskey Rebellion: Frontier Epilogue to the American Revolution
Edward Pollard: The Lost Cause
John Ford Rhodes: Lectures on the American Civil War (1913)
Basil Ernest Vyvyan Sabine: A History of the Income Tax
James Coffield: A Popular History of Taxation
Howard Jarvis: Mad as Hell
Karl Hess: Dear America
Duncan Fraser: The Smugglers
Henry Shore: Smuggling Days and Smuggling Ways
Art Wortman, ed.: Will Rogers: Wise and Witty Sayings of a Great American Humorist
Jude Wanniski: The Way the World Works
John Galt: Dreams Come Due
Politius: The Rise of the Roman Empire
Paul Kennedy: The Rise and Fall of the Great Powers
David Burnham: A Law Unto Itself: Power, Politics and the IRS
George Hansen: To Harass Our People
Jeffrey Bell: Populism and Elitism