Tax History

"Taxes are what we pay for a civilized society." --Oliver Wendell Holmes
(inscription at the entrance to the Internal Revenue Service, Washington D.C.)

|| Taxation in the Ancient World ||
|| Taxation and Tax Resistance || Taxation in America ||
|| Other Tax History Links ||

Taxation has a long and influential history in the shaping of civilization throughout the world. In Egypt, tax collectors are depicted in tomb paintings dated at 2000 B.C. The ancient Egyptians taxed many aspects of daily life, including even the use of cooking oil in preparing family meals. Egypt also taxed foreigners and slaves, and it is likely that the Biblical enslavement of the Jews in Egypt was accomplished by levying upon them a tax too high for them to pay -- which then left them vulnerable to enslavement under Egyptian law.

Ancient Rome had an elaborate tax system which included sales taxes, inheritance taxes, and taxes on imports and exports. In the 4th century B.C., the Romans built what author Charles Adams describes as "history's first tax haven" -- a tax-free shipping port at Delos which diverted traffic from Rhodes (where ships were charged a 2-percent tax.) During the 1st century A.D., the Roman emperor Vespasian imposed a wide variety of taxes including the Fiscus Judaicus (a tax on the Jews), and even a tax on urine when used for cleaning or tanning leather. In 212 A.D., a 10-percent inheritance tax was imposed upon all Roman citizens.

People have always hated paying taxes. In 60 A.D., the English fought fiercely against the invading Romans (and their tax collectors); the English leader, Boadicea, is quoted in Dio Cassius's Roman History as saying, "How much better to have been slain than to go about with a tax on our heads!"

During the Middle Ages, the legend arose of Lady Godiva, who rode naked through the English town of Coventry to protest the taxes imposed on the citizens by her husband. English citizens also forced King John to sign the Magna Carta in 1215 A.D., partly in reaction to his high-handed disregard for the tax laws of the land; the King had the power to spend, but only Parliament was supposed to have the power to tax.

In 1404, Parliament passed the world's first income tax. The tax was so unpopular that not only was it later rescinded, but all records of it were ordered burned by Parliament. Taxes repeatedly sparked revolts in England, and in France during the French Revolution of 1789, all of the French tax collectors were judged guilty of treason and sent to the guillotine.

Taxes imposed on American colonists by the British helped to persuade Americans to seek independence. In 1766, America's "Stamp Act Congress" protested British taxes on American newspapers, business licenses, diplomas and legal documents. Because American colonists had no representatives to protect their interests in Parliament, they fell victim to "taxation without representation." Americans so hated taxes that when the first Congress of the United States was created under the Articles of Confederation, it had no power to levy taxes. Not until 1789 was Congress given the power to tax American citizens.

In 1792, the American government imposed an excise tax on whiskey. This first American sin tax sparked a rebellion in Philadelphia, called the "Whiskey Rebellion." Another tax, in 1832, may have been a contributing factor to the Civil War. Known as the "Tariff of Abomination," the Morrill tariff was the highest tariff in American history, adding a 47-percent markup to prices of imported goods. Since the primarily agricultural South needed more imported goods than the industrial North, the tariff hit Southerners hard while benefitting sales for Northern manufacturers. Most of the money generated by the tariff was spent on Northern projects and needs.

In 1798, Congress levied the first direct tax on American property, including lands, houses and slaves. Temporary income taxes were also imposed on citizens by both sides of the Civil War in order to raise wartime funds, and in 1862 the Office of the Commissioner of Internal Revenue was created to collect wartime income tax funds. The first peacetime income tax was imposed in 1894, a 2-percent tax on earnings above $4000, which at that time only affected the very richest 2-percent of Americans. Income taxes became a permanent feature of American life in 1913, with ratification of the 16th Amendment. Taxes were expanded during World War I with revenue acts which created federal estate taxes as well as greater taxes on earnings by individuals and businesses.

The rise in taxes in American life has led to increasing searches for loopholes and other means of escape. In the 1960's, the tax-free Cayman Islands began to be used as a haven from the IRS. In 1996, the flight of wealthy Americans abroad caused Congress to pass a law prohibiting reentry to the U.S. for former American citizens who abandoned their U.S. citizenship to avoid paying taxes.

Tax History Links

The Tax History Project
http://www.taxhistory.org/

The Price of Civilization Document Archive
http://www.taxhistory.org/civsite/document.htm

The IRS FOIA Reading Room
http://www.irs.ustreas.gov/plain/news/efoia/index.html

• Adams, Charles. For Good and Evil: The Impact of Taxes on the Course of Civilization. Lanham, MD: Madison Books, 1993. UIC Call Number: HJ 2250 A323 1993.
• Adams, Charles. Those Dirty Rotten Taxes: The Tax Revolts That Built America. New York: The Free Press, 1998. UIC Call Number: HJ 2362 .A3 1998
• Brownlee, W. Elliot. Federal Taxation in America: A Short History. New York: Woodrow Wilson Center Press and Cambridge University Press, 1996. UIC Call Number: HJ 2362 B76 1996.
• Rolly, Paul and JoAnn Jacobsen-Wells, "Tax Relief." Utah Online, The Salt Lake Tribune, April 15, 1996. [http://utahonline.sltrib.com/96/apr/15/tci/02444126.htm].