Why would anyone want to write let alone read a book about tax?
I’ll tell you why.
It is one of the least discussed, yet most important subjects in the world.
Taxation is as old as civilisation itself. In fact, it is older. Even in the hunter-gatherer societies that preceded civilisation, there existed, say anthropologists, a sense of duty to the greater collective, and in all the years since man first settled some 10,000 years ago, not a single civilisation has existed without taxation.
A society is shaped by the way it is taxed, and in many ways taxes have shaped the entire course of civilisation.
Tax is power. Whether king, emperor or government, if they lose their tax revenue, they lose their power. This rule has always applied, from the first king of ancient Sumer to the social democracies of today. Taxes are the fuel on which the state’s operations run. Limit taxes, and you limit ruling power.
Every war, from ancient Mesopotamia to modern Iraq, was paid for by some kind of tax. Taxes make wars possible. If you want to end war, end taxes!
The aim of every conqueror, from Alexander the Great to Napoleon and beyond, was to take control of the tax base: the land, the labour, the produce and the profits. Conquerors plunder and then they tax.
When Genghis Khan took China, his plan was to kill everyone, as was his way. This was no small undertaking, as China then, as now, was the most populous nation on earth. One of his counsellors, however, a little-known man by the name of Yeliu Ch’uts’ai, pointed out that dead peasants pay considerably less tax than the living. Genghis saw the light and millions of lives were saved. That must go down as the greatest piece of tax advice ever given.
The same goes for revolution and revolt. Inequitable taxation almost always lurks near their heart. “No taxation without representation” was the cry of the American revolutionaries. Ruinous taxes levied by the tsar against peasant farmers led to the Russian Revolution. Perhaps most explicitly of all, the Philippine Revolution began with the Cry of Pugad Lawin, exhorting rebels to tear up their tax certificates. From Spartacus to Boudicca to Robin Hood to Mahatma Gandhi, the greatest rebels in history were usually tax rebels.
History looks different when viewed through this lens of taxation. It is hard to find a defining historical episode that doesn’t have a tax story lurking somewhere near its heart. Jesus was only born in Bethlehem because Mary and Joseph were there to pay taxes. Taxes paid for man to take his first steps on the moon.
Most of our greatest buildings – from the Pyramids to the White House – were, one way or another, built on the back of taxes. Some – the Great Wall of China and Hadrian’s Wall, for example – were built to collect them. Man’s first writings were not stories, but tax records.
Even the names we have, we have because of tax. Prior to the thirteenth century, ordinary people in the British Isles did not have surnames. By the end of the fourteenth century, they did, typically based around their occupation (eg Smith); their paternity (Jackson, Matthews, MacDonald); some defining geographical feature where they lived (Hill or Ford); or, as in my case, the village they came from (Frisby). The reason surnames came about? To distinguish people for the purposes of levying poll taxes.
In China, surnames are rather older. They go back, legend has it, all the way to 2852 BC and Emperor Fuxi. The reason for their existence, however, is the same.
A society’s destiny – whether it be rich or poor, free or subordinated – is determined by the way it is taxed. Indeed, the way a society is taxed speaks volumes about that society. In ancient Greece, many taxes were voluntary. At the other extreme, in authoritarian or totalitarian societies such as Soviet Russia or North Korea, people have virtually no ownership of their labour, their produce or their profit. Government takes it all. The developed world today sits somewhere in the middle of those two extremes. Excluding inflation (itself a form of tax), in the UK roughly 45% of everything you will ever earn is taken from you in taxes. Taxes permeate almost everything we do. Leaders use them both to exert control and to guide behaviour.
Without taxation, there can be no government: one leads to the other. Thus, though usually obscurely, tax is at the heart of just about every political argument: what should the government spend money on? How much should it spend? Who pays? And how?
“Taxes are what we pay for a civilised society” runs the saying. But what if you are opposed to the way in which your taxes are spent – on a war in the Middle East, say, or some wasteful infrastructure project? No matter. Beyond a vote of questionable impact every few years, your labour is still converted into funding for the projects. How civilised is that?
The social democrat sees taxes as a way to equalise society – to redistribute wealth. The libertarian says tax is theft: an invasion of an individual’s freedom and a violation of his private property rights.
So many of the problems we face today, not least the enormous wealth gaps between rich and poor, and between generations, can be traced back to our systems of tax. We tax labour constantly and heavily, we barely tax wealth or land. In fact the landowner often receives subsidy. The result is imbalance.
If we are to think about the future, the kind of world we want for our children and grandchildren, then we must think about the way we tax people. Tax reform is one of the few ways by which politicians really can change the world. But our tax systems, designed in an industrial age and in war, are outmoded, out of date, corrupted even and badly in need of reform for the new, globalised, digital age of the internet.
Tax is one of the most important subjects there is in the world, and yet we hardly talk or even think about it. The aim of my book is to change that.
Daylight Robbery: How Tax Shaped Our Past And Will Change Our Future, Penguin Business, £20. Audiobook on Audible.co.uk. Signed copies are available at dominicfrisby.com