Apparently the first modern income tax was imposed by Pitt the Younger in England in 1799. Astonishing the US did without income tax until 1861 . My question is how did governments manage to pay for stuff before emptying the pockets of their citizens? BTW no anti-tax nuttery in the question, I realize taxes are necessary in a modern state, I’m just interested in how things worked before the tax.
A variety of ways. Tariffs, taxes that weren’t called taxes, direct service. Conquest was big for a while with some empires. In other words, theft. In many situations, the king would officially OWN THE NATION. So people wouldn’t pay TAXES, they would pay RENT.
In many ways, the idea of TAXES was adopted in order to get away from the capricious and unpredictable nature of all the other modes of government funding.
They taxed them, just not as a percentage of income. This might be based on land owned, or personal property owned, or a flat or graduated population tax (poll tax*) rather than income, but could include things like a tax based on the number of windows in your house or the length of your beard.
Also, at least in feudal times, there wasn’t always a concept of a national tax. Rather, to raise money, the king might sell the right to claim taxes for a particular area for cash, and the person with that right would then squeeze a profit out of that territory,even if they had to do it at swordpoint.
- note that the poll in poll tax means “per head” , not a tax “to vote”. The words are related (in the sense of a poll being a headcount) and the latter sense did come to apply e.g. the Thatcher poll tax. Poll taxes were never popular.
Property taxes, trade tariffs, import duties, transfer taxes, feudal fealties, slavery, and good old-fashioned plunder and looting.
Offices could also be sold in a similar manner. So, for instance, a noble might buy from the King the right to be the official in charge of the wool trade, or a port official, or the assessor of weights and measures. They then recoup that money from merchants and traders, by charging them for certifications, or permissions, or whatever they happen to have been granted a monopoly on.
Or they can flat out sell honours to rich nobles who are only after the prestige, not the money- making opportunities
Pitt’s idea was far from original. The Domesday Book, compiled for William The Bastard was to assess the potential amount of tax he could raise from his subjects and their assets. This was a way of regulating Danegeld which had been around (under other names) since 1012 when Æthelred the Unready introduced an annual land tax to pay for a force of Scandinavian mercenaries.
aldibronti, you might look up the gabelle, the famous salt tax of France, for an example. 
What was new, though, was the increasing variety of different ways to make a lot of money. Back in the Middle Ages, if you wanted to extract money from people who had money, your first major target was going to be big landowners - in which case you can simply impose a tax on land itself and be fairly confident that you were milking the most productive cows (so to speak). Then there were craftsmen of various sorts … but mostly they belonged to guilds, so you could extract cash from them by simply making all the guilds pay for their charters and let them worry about how to divvy the pain among their members.
When the industrial revolution came along, suddenly you got people - factory owners and capitalists - making large amounts of money in new and different ways that weren’t already being taxed. They weren’t using much land, so land tax wouldn’t get them, they didn’t belong to any guilds, and if they were selling their goods within the country, they wouldn’t even pay import/export duty.
Income tax was a very clever way of abstracting away the problem of trying to devise new taxes to cover the new ways people were making money - you stopped caring about the mechanism by which people became rich enough to be taxed, and simply concentrated on the resource you were trying to harvest. It wouldn’t have worked well in the days when the economy was much less cash-based (a wealthy estate is one which can feed everyone on it well … not necessarily buying and selling anything much) but it was perfect for the industrialised, interconnected world.
In the US, and with the exception of the civil war, the federal government didn’t do much and didn’t spend much until the WW I. There was no standing army, for example. The main source of revenue was excises and tariffs. I believe that income taxes were collected during the civil war, then declared unconstitutional. WW I led to an amendment. Still, until WW II, the common man paid little or no income tax.
I am wondering more about the states. I grew up in PA and there was no sales tax until around 1950 (when it came in at 1%) and no income tax until after 1962 when I stopped living there. True the state didn’t do much, but it did something. For one thing it ran mental hospitals and I think it likely subsidized some other hospitals. I think it subsidized medical schools too (of which there were five in Philly alone). Real estate taxes were local and school taxes. So where did the state get its revenue? I know there was a 20% tax on tickets, whether to baseball games or the Franklin Institute and probably everything else. Can you run an entire state on an entertainment tax. The city had a 1% wage tax, but there was no state wage tax.
Wikipedia refers to Pennsylvania getting half of its revenue in 1900 from a tax on “bank dividends,” collected by withholding. I think this would have included (pdf) a tax on interest payments. Back in the very early days, there were state property taxes: Here’s 1828.
Slight hijack.
Where was all this money stored? Who kept track of it?
I assumed it passed through many hands on the way from the peasant to the King so theft must have always been a concern. Were there any famous robberies of the King’s money?
At what point in history did people say, “This is way too much money to keep in one place. Let’s rethink how we do this.”?
In the U.S. before the income tax, the greatest single source of tax revenue was the excise tax on alcohol.
The history of the tax is a fascinating thread that doesn’t get paid much attention. The whiskey tax pops up in 1789 as a way for the new nation to collect money. Americans drank about twice as much alcohol per capital then as they do today, so it made sense to tax the one heavily used universal product. Except that farmers in western Pennsylvania grew wheat and without roads had no good means to deliver it east, encouraging them to distill the alcohol out of it to make it portable. They got socked with a huge tax burden and that led to the Whiskey Rebellion, the first display of federal power.
The tax was dropped and brought back several times over the next century, returning every time the country needed money, like after wars. Between the Civil War and WWI, the tax on alcohol funded the small government needs of Washington.
Prohibition was a growing force starting in the late 1800s and a lot of states were going dry with an obvious battle looming at the federal level. Many of the writers on Prohibition say that the drive to pass the 16th Amendment was a response to the all-but-certain coming drop in revenue from the alcohol excise tax. (No, not because the Illuminati and Jewish bankers conspired to destroy God-fearing Americans with the Federal Reserve. :smack: )
Excise taxes on alcohol still produce huge amounts of money for individual states.
Anything can be taxed. Anything has been. In the words of the sage:
And the post office. Delivering the mail used to be one of the main things a government did. But in the 18th century, the post office worked more like a shipping company. The people who were receiving mail were supposed to pay for it (even if they hadn’t asked for it) and there were complex fees based on the size and weight of the mail and how far it had been sent.
It was a poorly designed system because a lot of the time the post office would go the expense of transporting the mail all the way along its route and then, when it arrived at its destination, the intended recipient would say they didn’t want the mail and refuse to pay. It wasn’t until the 19th century that post offices adopted the system of having the mail’s sender pay the fee.
King John wishes you had pointed this out. The royal treasury used to be a big pile of gold, silver, and jewels that the king took with him whenever he traveled. He was putting down a rebellion in 1216 and lost a minor battle. He was forced to retreat through a marsh and the heavy wagons that were carrying the treasury sank and were lost.
Wasn’t that just Johnny Lackland’s luck?
While King John did supposedly lose the royal treasury (or some significant part of it) in an estuary that emptied into The Wash, I do not believe he was retreating from a battle at the time. As I understand it, he was on his way from King’s Lynn to Newark, and was simply in a hurry and didn’t properly plan for the tide. But the extent to which the royal treasury was lost is disputed.
Still, your main point is valid: the wealth of the King was to some extent wrapped up in actual things like gold and silver plate, coins, etc.
One of the big complaints leading to the American Revolution was the excessive excise & import taxes by England (and the lack of representation in the Parliament that imposed these taxes). Taxes on tea & stamps (needed on every legal document).
In Tudor times Elizabeth I gave permission for her enterprising captains to hijack gold shipments heading towards Spain. She split the proceeds with them. Some of these, privateers like Sir Francis Drake did very well out of it.
In India the British found a convenient way to make money by obtaining tax collecting concessions in return for military service on behalf of the local rulers. There was an established tax collection system known as a Jagir and huge population. Clive of India, a man from humble stock acquired a huge fortune in this manner, much to the consternation of the existing ruling class.
Most Americans realized the taxes were not excessive. They were much lower than the taxes that Britons were paying (and much lower than the taxes the American government would impose after it declared independence). It was the lack of representation that was the major issue. Americans were fighting to have control over their own government not to get their taxes lowered.
taxes were around in the time of Jesus