Tax Collection in History
AbstractMethods of tax collection employed by modern governments seem dull when compared to the rich variety observed in history. Whereas most governments today typically use salaried agents to collect taxes, various other types of contractual relationships have been observed in history, including sharing arrangements which divide the tax revenue between the government and collectors at fixed proportions, negotiated payment schemes based on the tax base, and sale of the revenue to a collector in exchange for a lump-sum payment determined at auction. We propose an economic theory of tax collection that can coherently explain the temporal and spatial variation in contractual forms. We begin by offering a simple classification of tax collection schemes observed in history. We then develop a general economic model of tax collection that specifies the cost and benefits of alternative schemes and identifies the conditions under which a government would choose one contractual form over another in maximizing the net revenue. Finally, we use the conclusions of the model to explain some of the well-known patterns of tax collection observed in history and how choices varied over time and space.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2007-48.
Length: 38 pages
Date of creation: Dec 2007
Date of revision: Sep 2008
Publication status: Forthcoming in Public Finance Review
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Tax collecting; tax farming; share contracts; rent contracts; wage contracts;
Other versions of this item:
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-05 (All new papers)
- NEP-HIS-2008-01-05 (Business, Economic & Financial History)
- NEP-PBE-2008-01-05 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Douglas W. Allen & Dean Lueck, 1993. "Transaction Costs and the Design of Cropshare Contracts," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 78-100, Spring.
- Mikael Priks, 2005. "Optimal Rent Extraction in Pre-Industrial England and France – Default Risk and Monitoring Costs," CESifo Working Paper Series 1464, CESifo Group Munich.
- Metin M. Cosgel & Haggay Etkes & Thomas J. Miceli, 2010.
"Private Law Enforcement, Fine Sharing, and Tax Collection: Theory and Historical Evidence,"
2010-03, University of Connecticut, Department of Economics.
- Coşgel, Metin M. & Etkes, Haggay & Miceli, Thomas J., 2011. "Private law enforcement, fine sharing, and tax collection: Theory and historical evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 546-552.
- Noel D., Johnson & Mark, Koyama, 2012. "Standardizing the fiscal state: cabal tax farming as an Intermediate Institution in early-modern England and France," MPRA Paper 40403, University Library of Munich, Germany.
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