Taxation: The First 10,000 Years

When I was a kid, there were troops of old farts kicking around, whose sole purpose was to make a nuisance of themselves and dispense wisdom in the form of colourful homilies.  Any time anyone under the age of 40 screwed up, they would lean back like balding owls and pronounce: “There’s many a slip ‘tween the cup and the lip” or “A fool and his money are soon parted” or some other such nonsense.  My favourite was “There are only two things certain in this life: death and taxes.”  I always treated that one with “roll your eyes” respect because, as a student, I didn’t notice (or care) what taxes I paid (there simply weren’t that many.)  Furthermore, my youth came with a prepackaged shield of immortality that protected me from the Grim Reaper (who was only an ugly rumour anyway.)  In other words, both concepts were foreign to me.  In my world, people were supposed to pay their fair share of taxes.  After all, I did, and if they were unfortunate enough to get old and die, it was their own damn fault.  Luckily, these days we don’t let our old people hang out with us anymore.  We warehouse them in seniors’ facilities where they can wither away as they see fit and keep their smartass remarks to themselves.

The idea of death is easy to understand; all you have to do is live long enough, and it will come find you.  Taxes, however, are more complicated.   They are beautiful in their simplicity but downright grotesque in their execution.  In essence, taxation means, as a society, we are going to gather our money together to buy things we can’t afford individually.  Sometimes these things are tangible items like roads and boats and buildings, and sometimes they’re conceptual — like education, security and health care.  Regardless, we use taxation to pay for the common good.  The complication comes, not from what is the common good (I think we all agree on that) but how we get there from here.  This question has plagued most societies since before Kofu the Egyptian decided he needed a bigger tomb than his dad and somebody was going to have to pick up the tab for it.  In those days, however, it was pretty easy to figure out who did the paying.  Basically, when the pharaoh said it was tax time, you threw in your pennies or the next voice you heard was the guy with the whip, hollering “Pull.”  After all, pyramids don’t build themselves.  My point is, for most of history, it was the local Pooh-bah who decided what constituted the common good, and taxation without representation was a universally accepted concept.

This arrangement worked for thousands of years.  There were some bumps in the road — like Robin Hood and the Magna Carta, peasant revolts and the English parliament — but in general, people shut their mouths and paid their taxes.  The money disappeared into wars, royal mistresses and monuments and society thrived.  Unfortunately (or fortunately) this all came to a screaming halt in 1763.  This is an extremely tangled bit of history, but here’s the Twitter version.

Immediately following the Seven Years War (which many consider the first genuine World War) Britain found itself in dire straits financially.  They’d just beaten the crap out of the French … again, but they’d had to mortgage everything but the Tower of London to do it.  In a word, the Brits were broke.   They looked across the Atlantic at their American colonies and saw a bunch of fat and happy farmers with coin in their breeches.  It looked like a no brainer.  Parliament would tax the thirteen American colonies to pay for, not only their part in the recent war but also any future administration and protection.  To the English, this was a win/win situation; to the Americans, it was highway robbery.  Actually, the Americans weren’t opposed to taxes as such (no more than usual, anyway.)  They were much more concerned with who got their mitts on the money.  As freeborn Englishmen, they wanted some colonial representation in Parliament to oversee the coin they were shipping across the Atlantic.  They had the radical idea that if they had to pony up the cash, they should at least have a say in how it was spent.  It was a new Golden Rule (If I provide the gold, I make the rules) brought on by reading too much Voltaire and Rousseau by candlelight.  Lord North’s government in London called this outrageous school of thought treason.  The Americans, not known for prolonged discussion even then, reached for their muskets.  As we all know, insurrection is only wrong if it fails.  The Americans didn’t fail, the thirteen British colonies became the United States of America and for the first time since Pericles was a pup, taxation with representation was more than just a philosopher’s fantasy.

The odd thing was this New World idea caught on.  Pretty soon, French peasants wanted a say in how their government was run and how their money was being spent.  Then it was Haiti and the nations of South America; then Greece, and pretty soon, people all over the world were demanding this new taxation with representation.  It was a worldwide phenomenon and the first and only fundamental change to the tax system — until now.

Wednesday: Contemporary Taxation: A Fundamental Change