Today is the deadline for Americans to render unto Caesar. I thought it might be an opportune time for this old article about the Roman taxation system recently rediscovered in the dark recesses of my work files.
Roman taxes were no more excessive than those of modern times. Often they were far less per capita than in any modern nation. In the early days of the Republic, citizens paid a modest (one to three percent) assessment levied against land, homes and other real estate, slaves, animals, personal items and monetary wealth. With limited census accuracy, tax collection on individuals was at best a difficult task.
With expansion through military conquest, the Republic eventually found itself in the position where it no longer needed to levy a tax against its citizens in Italy. The state looked exclusively to the provinces for tax revenues. Accurate census-taking, however, was still an administrative headache. To simplify matters, taxes were assessed on entire communities rather than on individuals. Tax assessments in these communities fell under the jurisdiction of provincial governors and various local magistrates, who continued using rules similar to those of the old system.
These taxes were collected by publicani‚ farmers of taxes and public revenues. Rome put the collection of taxes up for auction every few years, thus eliminating its own burden for the collection process. The publicani would bid for the right to collect in particular regions and pay the state in advance of this collection. These payments were, in effect, loans to the state that Rome was required to pay back with interest. To offset this benefit, the publicani assumed the responsibility of converting properties and goods collected into coinage. In the end, the publicani kept anything in excess of their original bid, as well the interest due from the treasury. The risk inherent in the system was that they might not be able to collect as much as they had originally bid.
Tax farming proved incredibly profitable for both the state and the publicani. The publicani had the advantage of bidding against previous tax collections; it would take several collection cycles before auction prices were raised. In effect, they were bidding against a community’s income potential, and thus a large portion of any increase in income accrued to the tax farmers themselves. In this way, they increased their own wealth, but eventually the state would reap the benefit of increased collections down the line.
The process, however, was rife with corruption. For example, tax farmers could use their profits to collude with local officials and landholders to purchase large quantities of grain at low prices and hold it in reserve until times of shortage. The tax farmers were also money lenders: the bankers of the ancient world. They would lend cash to the provincials at exorbitant interest rates of four percent per month or more. In contemporary literature, tax farmers were lumped together with beggars, thieves, and robbers.
The first emperor, Augustus, set in motion the abolition of the tax farming system amid complaints from the provinces and large, unpayable provincial debts. The old system was gradually replaced by direct taxation administered by paid civil servants. Each province was required to pay a wealth tax of about one percent and a flat poll tax on each adult. This new procedure, of course, required regular census-taking to evaluate the taxable number of people and their economic status. In this system, taxation switched mainly from owned property and wealth to an income tax. As a result, the taxable yield varied greatly based on economic conditions. At least in theory, the system was fairer and more resistant to corruption.
Tax farming, however, faded out over time rather than being immediately abolished. In fact, it continued until the reign of Diocletian (284-305). Rome still collected both direct and indirect taxes. The indirect taxes—customs, tolls, fees for pasture rights on public land, etc.‚—were still sub-contracted to publicani. The biblical Matthew’s job was probably closer to that of a “customs agent” or a “rent collector” than an employee of a modern federal tax collection agency.
The flat tax was far less progressive than the system of tax farming. Growth in the provincial tax base under the old system led to higher collections in time, while fixed payments reduced this potential. Taxpaying citizens were aware of the exact amounts they owed and any excess income remained in their communities. While reassessments could adjust the taxable base, this was a slow process that left a lot of room for earning untaxed income. While seemingly less effective to the state than the publicani system, Augustus’s tax reform allowed for considerable economic growth.
As time passed, each successive emperor was challenged with meeting the soaring costs of running the imperial bureaucracy and financing the legions. New schemes to revise the tax structure came and went throughout the history of the Empire until it finally collapsed in the fifth century.
