Beware the ides of April

Policy Review, Spring 1994 by Adams, Charles

One of the first civilizations we know anything about began 6,000 years ago in Sumer, a fertile plain between the Tigris and Euphrates rivers in what is now Iraq. The dawn of history--and of tax history--is recorded on clay cones excavated in the town of Lagash in Sumer. The leadership of Lagash instituted heavy taxation during a terrible war. When the war ended, the tax men refused to give up their taxing powers. As a result, a proverb circulated, recorded on clay tablets, which reads: "You can have a Lord, you can have a King, but the man to fear is the tax collector."

Thus has it remained for millennia. Taxes have helped build mighty civilizations and paved the way to economic strength and security. At the same time, they have strangled economic growth, ignited bloody conflict, and ushered in national decline. How we as a nation tax and spend helps determine whether we are prosperous or poor, vigorous or languid, free or enslaved.

THE GLORY THAT WAS ROME

Historians consider the 200 years from Augustus to Marcus Aurelius (30 B.C. to A.D. 180) as the high-water mark of Roman greatness. Edward Gibbon, author of The Decline and Fall of the Roman Empire, claimed this was the greatest period of peace and prosperity ever enjoyed by the human race. How did the Pax Romana come about?

Part of the answer can be traced to a moderate, uniform, and forgiving tax system. Unlike the contemporary American tax system, in Rome's better days taxpayer interests were of prime consideration. In about A.D. 35, for example, Emperor Tiberius was asked to increase provincial taxes. Tiberius replied that the governors should "have my sheep shorn, not skinned alive." The first century Roman press simply would not tolerate abusive revenue agents; it once castigated city officials for hiring "the most merciless of tax collectors, full of inhumanity." Meanwhile, steps were taken to ward off taxpayer rebellion: The penalty for excessive tax collection was fixed at 10 times the excessive tax. Tax moratoriums were frequently used if harvests were poor. In the second century, both Hadrian and Marcus Aurelius decided to cancel delinquent taxes--and ordered Praetorian guards to burn the tax records.

This sensitivity to excessive taxation was an important safety valve for maintaining taxpayer contentment and building and sustaining the empire. Tax revolts led by Mithridates the Great in the first century B.C. had taught the Romans that angry taxpayers were a greater threat to peace than the barbarians of the north. Never in history--and certainly not in recent American history--had a government made such a conscientious effort to make its tax system palatable to taxpayers. Pax Romana was to a large extent a tax-pax-Romana.

THE GLORY FADES

Sooner or later, it seems, Rome's glory had to fade. Decline began under Diocletian and his greatly enlarged military and civil bureaucracy in the end of the 3rd century. Like Augustus, he reorganized the empire and restored order to Rome--but unlike Augustus, he centralized and nationalized the state. Augustus achieved peace by dismantling the army, decentralizing the state, and reducing taxes. Diocletian moved in the opposite direction--centralizing the state, accelerating tax rates, and nationalizing everybody and everything. He tackled inflation with military commands, ordering prices to remain stable under penalty of death. To his surprise, prices kept rising. He began a tedious process of valuing farming operations, based on what a farm should produce, rather than what it did produce--forcing many farmers to abandon their land.

Numerous ancient documents confirm that Diocletian's system gave birth to a monstrous bureaucracy, with more tax collectors on the government payroll than actual taxpayers. From Lactantius, a Christian apologist of the 4th century, we read: "The number of those receiving pay was so much larger than the number of those paying taxes and that because of the enormous size of the assessments. The resources of the tenant farmers were exhausted, fields were abandoned, and cultivated areas transformed into a wilderness."

Diocletian's new tax system could not work unless all citizens, particularly farmers, stayed on their land. Farmers eventually were taxed on the number of workers on their land, and they began to flee their farms in droves. Then came the imperial crackdown: All farmers, their children, and their children's children were bound to the land forever. Thus, the fundamental right of all Roman citizens to move about the empire was destroyed. After 800 years, Roman citizens were finally to lose their liberties--not to an alien power, but to the very government that was supposed to protect them. As in contemporary America, civil liberties in Rome were adjusted to a tax system; the tax system was not adjusted to civil liberties.

Thus began Rome's gradual decline, instigated by capricious and burdensome taxation. Indeed, it is not too much to say that oppressive taxation eventually led to the fall of Rome to the barbarians. How so? In the early Republic, the small citizen farmer served--without pay--in the military as a patriotic duty. He was the best fighting man in the world. But in the last century of the empire uncontrolled tax evasion became rampant and the quality of the legions changed. The frontier garrisons were composed of overpaid misfits from Italy and self-seeking barbarians. Conscription was used as a tax dodge. The city of Rome fell because it could not defend itself against a third-class military force.