Income Taxes Taxes, we hate them but we can't seem to live without them. There are sales taxes, income taxes, use taxes, corporate taxes, payroll taxes and the list just keeps going on and on. But where did the idea of taxes come from? Is the idea of financing a country or state or even city for that matter by taxes new? Let us see. Some people wonder when the first taxes were collected. I can only tell you when the oldest tax records were found. They were from a city-state named Lagash in what is today Iraq. The records were recorded on a clay tablet which is from around 6,000 B.C. This means taxes were being collected for at least over 8,000 years. It is said the taxes were kept as low as possible except during war or hardship. I think it is important to know that banking started somewhere between 3000 and 2000 B.C. in Mesopotamia. Without banking there could not have been any meaningful accounting of taxes. Ancient Mesopotamia, instituted a tax, when translated was called 'burden'. Of course, this tax wasn't on money since there wasn't any. A citizen might be required to bring a cow or sheep to the government office once a year. Merchants would try then as now to avoid taxes. Here is a portion of a translated letter from 1900 BC: "Irra's son sent smuggled goods to Pushkin but his smuggled goods were intercepted. The Palace then threw Pushkin in jail! The guards are strong...please don't smuggle anything else!" Almost everything you did was taxed even funerals. But the hardest tax was the labor tax. Every able bodied man who was the head of a household owed the government many months of labor. The government might make you harvest government fields or serve in the military. The rich would send people in their place, which was illegal but overlooked. Every Egyptian paid tax. As early as 3000 BC the Pharaoh would appear in a ceremony before his people, this was called the Following of Horus. He would then collect taxes. The Egyptians were taxed on cattle and grain. They also had to meet a labor requirement. On top of all this the Pharaoh would tax them when he needed. As is now there were tax shelters in the form of royal charters of immunity from taxes. Princeton University has a papyri document from Philadelphia, Greece, dated 35 A.D. which is a tax roll. Since it is a fragment most of the details are missing. In the fifth century BC the Greeks were the first to establish a system based on universal coinage, which made taxing easier. Mayan society was not one empire but a lot of separate cities and villages. They were a nation however and all worshipped the same gods. The plebeians were farmers, merchants and some were artisans and each paid tax. They were paid to authorized collectors. When the owner of a property died, the land was divided up among his nearest male heirs. The Sumerians had an interesting name for taxes, it was found on one of their tablets. Taxes were called burdens. In Mesopotamia there was no coined money taxes were paid in different way throughout the year. In ancient Israel under Roman domination taxes were complained about as being too harsh. The Romans didn’t single out the Jews for this taxation, they also placed it upon all those non Romans living in the territory. What was discriminatory was the fact the money the Jews used to voluntarily give to their temple every year was diverted to the temple of Jupiter Capitolinus in Rome. This was also a form of taxation. The population of ancient China was mostly farmers. Everyone in China had to pay taxes. Farmers usually paid their taxes in the form of grain or labor. Italian city-states in the 1200s and 1300s levied a dazio tax on mercantile property in time of war. This tax could be levied up to several times in a year during wartime. Britain faced a threat from the French in 1797. Revolution spread by the French had reached Germany, parts of Italy and the Netherlands. French troops were on their way to help the Irish rebels and British sailors were mutinying at Spithead. William Pitt the Prime Minister knowing the treasury was almost empty started an income tax. The tax worked and Britain was saved. In America, the first income tax was introduced in 1861. It was required to pay for the Civil War. The citizens were taxed at the rate of three percent on incomes over $800.00 per year. The next year it was raised to five percent of all incomes over $10,000.00. Most of the ordinary citizens didn't make enough to pay taxes. In 1893 Congress passed an income tax but the Supreme Court ruled it unconstitutional in 1895. President William Howard Taft pushed for a constitutional amendment over turning the decision and an income tax was passed when the 16th Amendment was ratified in 1913. As we can see from the above where I only touched on a few societies, taxing is a very old idea. In many places it was much more popular in war time than in peace time and because of this was suspended in time of peace in some countries, but many places retained it. There are countries which have no income tax. This sounded unbelievable to me, but they exist. The United Arab Emirates is one. They make enough from oil not to have to charge income tax. Some of the other oil rich Arabian countries also have no income tax. The Bahamas. Income tax is based on residence and you can get an annual residence permit or purchase real estate and live income tax free there. Bermuda is another country without income tax. The problem with moving there is the high prices for everything. Andorra has no income tax and is under pressure from the European Union to establish an income tax. Andorra is located high in the Pyrenees mountains between France and Spain. Monaco has no income tax and has the lowest crime rates in the world. Again, it would be very expensive to live there. If you wanted to move there you would have to get a legal residence permit which would cost you about one half million dollars.
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