A History of Taxes – Part 2
Taxes and Romans
Finally moving away from the Greeks, we now come to the Romans. Scholars often refer to Roman taxation as “more or less organized robbery” and Roman tax men as “a band of robbers.” But Roman taxation was not always bad. There was a two hundred year period at the zenith of Roman civilization when taxes were modest. Actually, all kinds of taxes, as well as no taxes, marked the Roman period. Taxation was as vital yet as unpredictable in the Roman story as were the legions, the Senate and the Caesars. The half-mad Nero once offered to abolish all indirect taxes and make a “beautiful present to the human race.”
Romans – The Early Years
The early Roman Republic required little taxation because it operated with free labor. The army – which can be the most expensive operation in every society – was a citizen’s army, composed of property owners who served for one year without pay. They even provided their own uniforms and equipment. This spirit of volunteer free public service inspired all government offices. Even the magistrates served the city without pay. It is difficult to understand the importance of this ancient practice, especially in our age, when no one seems willing to lift a finger for the government without a fat paycheck.
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. The Romans, like other ancient civilizations, used the great men of their society to handle tax assessments. Taxpayers loved and admired the censors, and no doubt the integrity of these great men rubbed off on the taxpayers. By contrast, modern tax systems use professional public relations officers to manipulate taxpayers with advertising techniques that utilize fear more than inspiration.
Trouble started, however, when Roman armies lived off the populace and collected tribute in block form called “stipendium”. From For Good and Evil, The Impact of Taxes on the Course of Civilization by Charles Adams
Taxes and the End of the Roman Empire
Mithridates the Great ruled a small country in what is now Turkey. He had an extraordinary ability to arouse discontent among unhappy taxpayers. In 88 BC he organized a rebellion against Roman rule. By granting 5 years of tax immunity to every city that joined his rebellion, he gathered considerable support. The Roman Senate sprang into action and appointed General Sulla to raise an army and restore Roman authority in the east. Sulla succeeded in suppressing the rebellion after a four year struggle.
When the revolt was crushed, Sulla ordered the leading citizens of the revolting cities to meet him at Ephesus. At that place the citizens were to remit 5 years of back taxes plus compensate Sulla for the cost of the war. To enforce this tax, Sulla established “special agents”. These special agents had the power to scourge and behead, which was enough to make any taxpayer cooperative. Up until this time there had been self-assessment tax collections, private tax collection, army tax collectors and regular government tax men. But these new “special agents” were highly skilled specialists with the arrogance of bureaucrats and the power of military executioners. Taxpayers lost all inclination to evade. Special Agents have emerged time and again in the course of history, surviving in the modern age as “fiscal police” or simply “special agents”, using the title first given by Sulla over two thousand years ago.
As the practice of Sulla’s special agents was put in to place in other provinces, soldiers came to realize that the rich spoils of war came from their commander, not the Roman Senate. Roman generals returned to Rome with the blind loyalty of their soldiers. Great civil wars broke out as rival armies fought. With these semiprivate armies, establishment of a military dictator was inevitable. Thus, the Roman Republic died. Kings, dictators and generals would now rule for the next two thousand years. Democracies and republics would not play a dominant role in civilization again until the 1800’s.
Taxes and Julius Caesar
Two generals succeeded Sulla – Pompey and Julius Caesar. Pompey kept up the harsh taxation of Sulla. When Julius Caesar replaced Pompey he adopted a new tax policy. He believed the road to peace was modest taxation, not plunder. Caesar reduced taxes and offered rebates of previous taxes. The Jews were jubilant over Caesar’s new system. Caesar’s system was flexible. If the harvest was poor, taxes were reduced. Because of this benevolent tax policy the Jews filled Caesar’s granaries at Sidon. For the first time in over 150 years Rome was at peace with her rich eastern provinces. Then came the Ides of March, 44 BC.
The murder of Caesar darkened the tax story in the east once again. Brutus took over and went from city to city seizing everything. Cities that resisted were sold into slavery. In Rhodes, all the ships in the harbor were seized. And then came Marc Antony, who defeated Brutus. He was even worse. Greece and the east were once again plundered. From For Good and Evil, The Impact of Taxes on the Course of Civilization by Charles Adams
Taxes and the American Revolution
No modern revolution was more deeply rooted in taxation. taxation not only caused it but helped unify the disorganized and squabbling colonies……but maybe not exactly the way you think.
First, the British taxes on the colonies were neither unfair nor oppressive. In fact, Americans had it great – we had the protection of the British empire, our land was rich, business was good, and there were jobs for everyone. Europe’s social castes did not enchain us and our sons were not conscripted to fight in wars in far off places… we had it good.
So what happened? well, some missteps and misstatements by both sides.
“Taxation without representation” was indeed a problem. But no one knew quite what to do about it. (after the American revolution, other colonies such as Canada and Australia were able to find more productive solutions) But at the time there was no agreement by the British parliament or American leaders on what could be done to avoid “taxation without representation”. Ben Franklin, unknowingly I presume, complicated the issue. He went over to England as our spokesman and said that internal taxes were bad but external taxes were OK.
By internal taxes, he meant the stamp tax and other taxes that were paid on transactions within the colonies. External taxes, according to colonists’ definition, were those like import taxes that were on transactions that only partially took place within the colonies. They believed import taxes were external to the colonies. Yes, if you’re confused about this you should be. It makes little sense. No one caught on to the connection between import/export taxes and the ultimate prices paid for the goods and services. Essentially, import/export taxes affected the “other guy” so they were OK.
OK said the British parliament. if that’s what you want we’ll play along and give you whatever it takes to make you happy. So, the British enacted new tariffs, import and export taxes. Then, Americans changed their mind. They saw the folly of their reasoning…but it was too late and the situation got worse.
Taxes and the Boston Tea Party.
Ah…. finally an historical event clearly about abusive taxes. Was the Boston Tea Party a protest against the British tax on tea, as we were all taught? No, not one bit. The colonies had already been boycotting English tea for 5 years prior to the Boston Tea Party! They had instead smuggled in Dutch tea and were doing quite well. There was tea for all and no British tea tax paid. Naturally, the British did not like the boycott. so the British bypassed the duties at home. The Parliament allowed British tea merchants to avoid the import tax of getting the tea into England and then pass the savings along to the colonies when they shipped the tea over and thereby sold British tea at a price lower than the Dutch smuggled tea.
But who would sell this British tea?
They did it through loyal British merchants in the colonies. But would the colonists buy the cheaper British tea even though it included a tax? Yes. So much so that the result was that loyal British merchants were getting all the business and a tax was still be paid to England. Obviously the colonists didn’t mind the tax that much – they still were getting cheaper tea. BUT, the non-British MERCHANTS didn’t like the process. The British merchants with the help of England had essentially established a monopoly on tea sales. The colonial merchants feared it was only a matter of time before additional monopolies would be established with the same mechanism and they would be forced out of business.
So, a group of MERCHANTS dressed up as Indians, boarded a boat loaded with tea and dumped it into the harbor. Was this a crowning moment in American tax protest? Not at all. The Boston Tea Party was viewed as the wanton destruction of private property – at a time when private property was highly regarded. This event was very grave and did not sit well with the colonists. Ben Franklin was shocked and demanded that full restitution be paid at once to the owners of the tea. Anyway, it escalated into war.
However, the colonists were soon to find that fleets of warships, battalions of redcoats, and cannons were a lot scarier than a few tax collectors. Ironic part — America won the war – mostly because England found it too expensive to wage war so far from home. BUT after the war, America faced huge debts and taxes, even with representation, were going to be enormous.
Taxes, Slavery and the American Civil War
“Slavery – the one cause of the Civil War.” – John Stuart Mill, 1862
Can there be any doubt about it? Certainly the American Civil War was about slavery… wasn’t it?
Well actually, one of the most popular myths in American history is that the Civil War was started over slavery and that Lincoln, the Great Emancipator, used a bloody war to break the chains of bondage that shackled over 3 million black Americans. Just prior to the war, the South had everything its way.
Examples: prior to 1860:
North SouthPresidents 11 69% 5Attorney Generals 14 74% 5Supreme Ct Justices 17 61% 11Speakers of the House 21 64% 12
(Jimmy Carter was the next Southern President elected since 1860.) In 1860, Southerners controlled the Supreme Court and Lincoln and Congress were approving a constitutional amendment to protect slavery forever! What happened?
Lets rewind the clock back to the year 1832. By 1832 the national debt left from the War of 1812 had been paid and Southerners saw no need to continue the high import taxes that only seemed to raise prices for Southern consumers. Either the South paid high import taxes on foreign goods or it bought Northern manufactured goods at excessive prices. Either way, Southern money ended up in the North. To say the least, the South was not happy with this arrangement.
So, in 1832 a convention was held in South Carolina to nullify these federal import taxes. The convention declared the tax unconstitutional and authorized the governor to resist the enforcement of these taxes by the national government. It looked like a civil war was in the making. Cool heads prevailed, however, and the great Compromise of 1833 reduced import taxes over the next few years to levels the South could tolerate.
Over the ensuing years, however, Northern commercial and manufacturing interests forced through Congress new taxes that again oppressed Southern planters and made Northern manufacturers rich. In 1850, John C. Calhoun, the South’s most outstanding spokesman, delivered a speech to Congress. It listed three grievances of the South that could lead to secession from the Union and war. The first two involved fears about the erosion of power of the South in general and the states in particular.
The third, and only concrete complaint, was about taxation. In Calhoun’s view, federal import taxes were class legislation against the South. Heavy taxation on the South raised funds that were spent in the North. The center of economic life in the United States was shifting strongly to the North. Calhoun threatened secession if the taxes were not reduced. But what about the slavery issue? Well, during his campaign for the presidency in 1860, Lincoln repeatedly said he would not interfere with slavery in the South. Actually, most Northerners did not care much about black men in bondage, any more than they cared about the Indian in the West or poor illiterate workers in factories.
By and large many black slaves received better treatment and more compassion than their counterparts in the North.
Lincoln, in fact, assured Southern slave owners that fugitive slaves would be returned. The Congress and then the Supreme Court (Dred Scott decision) further affirmed that slavery was here to stay.
However, as soon as Lincoln was elected and Congress assembled in 1861, they enacted new high import tariffs. Slavery was not an issue – higher import taxes were. In his inaugural address Lincoln said he would collect the customs in the South even if there were a secession!
Fort Sumter, at the entrance of the Charleston Harbor, began filling with federal troops to support the collection of the new taxes. The Civil War started in 1861 when South Carolinians fired on the federal garrison at Fort Sumter. The conflict had been brewing for decades – but it was not over slavery. It was over taxes.
Two years later, Lincoln issued the Emancipation Proclamation, and then only after repeated military defeats, as a last resort to rally the North behind a worthwhile cause. With respect to the slave issue – most Northerners did not care much about black men in bondage, any more than they cared about Indians in the west or poor illiterate workers in the factories. By and large, many black slaves received better treatment and more compassion than their counterpart in the North.
Marc was born in Cary a long time ago. Yes, he is an original Cary-ites. Cary was really a small town back then and it was when he was at Cary High School, home of the ‘White Imps’, that Cary got its second stop light and the ‘white’ part was dropped from the White Imps mascot to be more racially sensitive.
After graduating from UNC-Chapel Hill, Marc served in the US Air Force for four years. He was a missile launch officer at an ICBM complex and was stationed at Little Rock Air Force Base in Arkansas.Marc was ready to go to nuclear combat, toe-to-toe with the Russkies, on your behalf. During the quiet moments of protecting your freedom Marc studied for an MBA degree.
After leaving the service during Carter’s stagflation years, Marc could not find a job. So, he got married and went back to school, this time at NC State University. While Coach Valvano was busy winning a national basketball championship, Marc was finishing up his second Master’s degree, this time in economics and statistics.
Visit Marc’s website today for all of your tax needs! From payroll, bookkeeping, personal tax returns, business tax returns, and any other general CPA work, Marc is there for you all year round (not just the tax season!). http://www.marccpa.com/
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