A History of Taxation, Part Two: Taxation and Greece

W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…

The Greeks had 2 ways of taxing their people. One was liturgy, where wealthy citizens selflessly gave more to the government than they were forced to. The other system was named “tax-farming,” which had an extended and interesting history. Tax farmers were private citizens who placed bids at public auctions for the right to gather a certain tax, such as a harbor tax, an inn tax, or a sales tax. With correct records from previous years, and excluding any misfortune, the amount of tax revenue to be expected could be accurately calculated. The business was risky, but seems to have been profitable. In the city-states, tax farming was a better method to government tax administration. The private contractor did a better and more economical job of gathering taxes.

The right of tax collection is a huge delegation of sovereign power. But considering that taxes were low in Greek democracies, tax farming was not a very large industry. To the Greeks, it was simply an efficient way to collect taxes in a system in which tax evasion was not worth the trouble. The most grave abuse of the system were from the tax farmers.

The moderate system of tax farming, originally instituted by the city-states, contrasted strongly with the system of the later Greeks in the third to first century B.C. We see accounts of how the citizens twisted under the extreme oppression of the tax farmers. And this was before the Romans were around! The Greek democrats who instituted tax farming would have been disgusted to learn that in a few hundred years their simple private collection system would evolve into a monster of oppression. They would have been even more astounded, perhaps, to learn that tax farming flourished in Western civilization, in many strange methods, for 2,500 years, finally going out of style in the early 1900’s. Go here if you want help with modern-day Tax Preparation, bookkeeping, and payroll in Raleigh NC

Greeks were pillars of civilization in the ancient world and had an interesting take on taxes and government. The Greeks stated that the liberty and freedom of a society was most accurately measured by its tax system. We, 2,500 years later, are less profound in our analysis of taxation. We seem to accept any tax adopted by our legislators. We let class politics form tax laws. And we let legislators tax just about anything they please in any way they want. If you are feeling the pressure with today’s taxes, call a Raleigh NC CPA for all your tax-related needs!

Overall, the bright spot in the Greek history was in their administration of taxes. Tax revenue was evaluated and administered by the taxpayers themselves, without the intervention of a massive government bureau. Even more important was the response of the rich to the needs of the community. They spread their wealth with the community and did not hesitate to see that the city and its people benefited from the bounties bestowed on them.

The Greek view was simple – taxes are tyrannical, and hence illegal, if they are demanded by arrogance and compulsion. They are justifiable when based on reasonableness and loving care. We have retreated a great distance from those lofty ideals.

Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and The Rosetta Stone.
http://www.marccpa.com/