Tax collection in the early days/ Old West

Factual Questions
1

My wife and I were having a discussion about people who don’t pay their taxes, and the general hatred of the IRS, which got me wondering exactly how taxes were collected in past centuries. For the sake of discussion, I’ll limit this to the U.S., but back in the days of the Old West for example, if I was homesteading out in the middle of nowhere with some cattle, who knew I was there to even try and collect income taxes from me? If I couldn’t read and wasn’t familiar with what a real badge looked like and some random guy showed up saying he was from the Government and that I owed him taxes, how would I know he wasn’t a scam artist? More to the point, what stopped me from just shooting him? What if I was a mountain man who moved around and was only back at my Unibomber style one room shack once every few weeks? How would they know when to come hit me up fot taxes? They couldn’t leave a note, because I still can’t read, and I might think it was a scam anyway.

I imagine this must have been an even worse problem back in the days of the Founding Fathers when it was fine that people like Ben Franklin and John Adams who had money were willing to set an example by paying their taxes, but what incentivized me as the lowly ditch digger to want to part with my money for the greater good of the country?

2

Lowly ditch diggers didn’t pay income taxes. The Revenue Act of 1861 created the first personal income tax of 3% on incomes over $800. Ditch diggers weren’t making $15 per week in 1861.

In 1894, the Wilson-Gorman tariff taxed all incomes over $4000 at a rate of 2%. Less than ten percent of households paid any income tax.

After the Sixteenth Amendment, which established the modern income tax, was passed in 1913, the the top tax rate was 7% on incomes above $500,000 ($10 million 2007 dollars).

So few people at the bottom of the income scale paid any income tax at all.

3

Fear Itself is right about no income taxes in the early days.

They paid booze taxes (see the earlier hatred for “Revenooers”.). They had serious tariffs & duties, too in those days. “Imported” meant *expensive.
*

Remember the Tea Party? Taxes on tea.

Locally, they had RE Property taxes and personal property taxes- where some dude would come to your home and assess what you owed based upon what you owned. There’s a scenario on this in one of Jean Shepards books.

Poll taxes, head taxes, road tolls, serious gov’t fees, sales taxes, and so forth.

But yes, a pioneer did not pay much in taxes.

4

It’s also worth noting that the early American governments often used lotteries to raise money. This was one way to get voluntary participation, especially from lower-income people.

5

In the days before computers and big filing cabinets and other ways to enhance organizing and listing things, taxes generally were on simple, easy to coral revenue sources.
Tarifs were a great one; any ocean-going port would have a tax officer. I suppose you could off-load in some podunk fishing village, but try moving a ship-load of goods one horse-cart at a time. By the second convoy of 30 or 50 carts, assuming you could find that many, someone would notice. There was a government representative and some sort of authority garrisoned nearby, and the business people you dealt with knew they could lose a lot of money in fines for buying your imported beer or tea.

Look at the Stamp Act, which went along with the tea tax - an official stamp on legal documents, for example. You want it made official, you pay the government. Your taxpayer comes to you. If they have eough possessions to worry about legality - of a contract, land sale, etc. - then they have incentive to pay up.

Same thing - you didn’t worry about retailers, you went after the manufacturer or wholesaler - liquor taxes, for example. How big a distillery can you set up before someone notices you’re there and decides to demand payment? Even if you hide it in the woods, soone or later you’ll be tracked down. You can only haul so many cartloads out of the woods before they start following the tracks backward.

Millers (the kings in the good old days loved to tax grain); the convenience of having your grain done in a short time in a big mill beat the effort of using a small grindstone at home.

the wild west was fine for people spread out and barely established. Once you switch from ranches miles across to farms in quarter sections, the government infrastructure is there to ensure you pay a land tax, land transfer tax, even a poll tax if you want to vote, etc.

Still, the best way was to tax the big businesses that couldn’t run away or hide; tax railroad revenue, manufacturing, and imports.

The best system way back when was the Roman Empire’s “tax farming”. the emperor granted taxing rights to the governors, and so on down the line. The governor could do what he wanted as long as the em[peror got his required amount, so any lifestyle enhancements came from upping the rates even higher. At the bottom, there was the actual collector - IIRC St. Matthew was one. They were empowered to collect a certain tax from a certain area, in return for a share - hence the incentive to be persistent and nosy. Oddly enough, the people who were squeezed by unreasonable levies did not like the collectors.

Keep in mind that in the days before automobiles and phones and giant cities of impersonal anonymous apartment buildings, the world was a lot smaller and everyone knew each other’s business. As anyone from a small town will tell you, everyone is nosy and gossips; so you could not keep a secret like having lots of money or a secret business. In fact, a lot of crime in those days was along the lines of “they broke into the old man’s house and killed him looking for money, because the gossip was he had a fortune hidden in his poor little house.” Gossip does not have to be correct - it just has to excite the authorities to investigate.