Evolution of Tax
February 25, 2008
Benjamin Franklin is credited with stating that there are only two certainties in life: death and taxes.
Even in Franklin’s day, taxation was not new. Hammurabi produced some of the first written laws as far back as 1792 BC and, sure enough, tax law was a significant component of the legislation the Babylonian emperor carved into a six foot tall stone tablet.
Although Hammurabi’s laws were literally set in stone, tax law has evolved through the centuries. Certain taxes have been abandoned as commerce and the way we live has changed.
Goods were often the primary target for tax revenue. I was about to give arrow shafts as an example of a good that was commonly taxed during the Middle Ages. I had thought such taxes were abandoned as weaponry changed and new taxation sources were identified. Instead, a Google search to check my facts revealed the error of my thinking. Remarkably, arrow shafts continue to be taxed in the United States.
Leaving that anomaly aside, it is a fact that taxation regimes have evolved as successive governments devised new ways to fund government expenditure and ‘manipulate’ their political landscape.
Emperors, kings and feudal lords once levied tithes, taxes or duties to pay for wars or the upkeep of castles and palaces or other public projects. Surprisingly, Income Tax was not introduced though until comparatively recent times. The idea to tax income originated in Britain in 1798 when there was an urgent need to fund the Napoleonic wars. Though it was introduced as a temporary tax, it looks certain to out-live our great-grandchildren.
Of course we need schools, hospital and roads and the money has to come from somewhere. So taxes are undoubtedly of great utility when correctly applied. The question is whether smarter taxes could be levied. Taxes that have the effect of changing bad behaviours by introducing a cost for undesirable activities.
Some clever minds are already working on this and they have some interesting proposals.
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