TAXATION

TAXATION. Early modern Europe was home to a bewildering array of taxes. The church collected tithes, lords exacted feudal dues, towns imposed customs duties, and rulers levied state taxes. Although there were multiple channels by which fiscal resources were extracted and redistributed throughout society, this essay will focus on state taxation, which expanded most dramatically in this period. To meet growing costs of war and debt, rulers across Europe raised taxation to unprecedented levels, forming what historians call "tax states." The tax state was not wholly powered by a modern centralized bureaucracy, but it had a profound effect on early modern politics and society. On the one hand, it reinforced social inequality, as rulers created fiscal alliances with elites and levied taxes on the common people. On the other hand, the tax state shaped early modern politics, as revenue-hungry sovereigns clashed with representative institutions and provoked popular tax rebellions. Even as popular tax revolts subsided in the eighteenth century, ideas linking taxation, citizenship, and political representation fueled revolution in the British colonies and in France.

THE RISE OF THE TAX STATE

Taxation was essential to the development of the modern state. In the Middle Ages, kings mainly "lived of their own," that is, supported themselves with revenues from the royal domain, which included income from crown lands and various feudal and regalian dues. Over the early modern period, however, European monarchies expanded beyond the medieval domain to levy taxes. Tax revenues mounted steadily across Europe in the sixteenth century, even taking high population growth and inflation into account, and soared to new heights in the seventeenth and eighteenth centuries. Not all European countries followed this trend; Brandenburg-Prussia relied heavily on domain revenue as late as the eighteenth century. But the overall pattern is clear: the early modern tax state eclipsed the medieval domain state and considerably expanded the financial resources of rulers.

The tax state was a child of war. In this period of "military revolution," as armies grew spectacularly in size and required increasingly intensive training and elaborate supply networks, the costs of war skyrocketed. French military expenses increased five to eight times during the seventeenth century; Spanish war expenditure peaked in the 1650s; the English budget increased, in real terms, at least sixteen-fold between the late sixteenth and early eighteenth centuries; expenditure in Denmark and the United Provinces also accelerated dramatically. Consequently, rulers across Europe scrambled to find revenue by increasing "ordinary" taxes and creating new "extraordinary" ones that, with time, would be deemed ordinary as well. Monarchs became keenly aware of the fact that projecting power abroad depended on financial strength at home.

For ambitious sovereigns, however, there seemed never to be enough tax revenue available to finance military campaigns. Thus, in the city-states of Italy and the Netherlands, and then in unified monarchies, rulers began to borrow and accumulate debt. This recourse to credit, in turn, contributed to the growth of taxation, because short-term war debt was often consolidated into long-term debt serviced with tax revenue. If, in the sixteenth century, taxes were used principally to pay for burgeoning state administrations as well as war, in the seventeenth and eighteenth centuries, the vast majority of tax revenue was spent on military campaigns and the increasingly large debts they generated. As a result, belligerent states in the seventeenth and eighteenth centuries confronted a spiral of war, debt, and taxation that, as we shall see, profoundly shaped the political life of the age.

Although the fiscal weight of the state grew rapidly in the early modern period, it should not be inferred that states developed modern centralized bureaucracies of the kind associated with "absolutism." Today, historians stress the limits of the absolute state and emphasize how powerful monarchs like Louis XIV (ruled 1643–1715) had to negotiate with elites and regional and local institutions.

In practice, even "absolute" sovereigns could not tax at will. Although there was little theoretical recognition of the citizen's right to consent to taxation before the eighteenth century, rulers regularly sought the consent and cooperation of corporate institutions to reduce resistance to the tax levy. In addition to dealing with law courts, church organizations, and municipal governments, monarchs consulted with a host of representative bodies that flourished in the early modern period. The Spanish monarchy negotiated with the Castilian Cortes; the Holy Roman emperor dealt with the Imperial Diet (just as territorial princes in the German lands worked with provincial diets); French kings summoned the Estates-General and provincial Estates; and the English crown consulted Parliament. Representative bodies haggled over the weight and form of taxes but usually found it in their interest to compromise with monarchs, who rewarded their acquiescence with fiscal and administrative privileges. Representative institutions were also willing to compromise at times, because the elite social groups they represented (clergy, nobility, urban notables) were heavily invested in state debt and did not want to interfere with taxes that funded their interest payments. In this respect, there was an inherent tension between the financial interests of ordinary taxpayers, who wished to minimize the tax burden, and those of wealthier state creditors, who feared that poor tax yields might jeopardize returns on their investments.

Negotiations between rulers and corporate bodies did not, however, always run smoothly. In seventeenth-century England, fiscal strife combined with religious conflict to produce a constitutional crisis and civil war. When the early Stuart kings sought to levy new subsidies, forced loans, and ship money, Parliament reacted by asserting its right to consent to taxation. In 1640, after Charles I refused to work with Parliament, the crisis turned into a bloody civil war in which the king was executed. Ironically, the English Civil War and the Glorious Revolution of 1688, both of which secured for Parliament a central role in the English constitution, ultimately made it easier for the English state to raise taxes. Eighteenth-century England and the Netherlands experienced the highest rates of taxation in Europe, owing in large part to the sense of legitimacy that representative institutions in both countries bestowed on tax levies.

Elsewhere in Europe, the relationship between monarchs and corporate bodies evolved differently. In the Fronde of 1648, the Parlement of Paris challenged the fiscal policies of the crown, but it was not nearly as successful as the English Parliament. The French monarchy not only quelled the Fronde, but stopped calling the Estates-General after 1614–1615 and replaced many provincial Estates with more easily controlled royal officers. But even in "absolutist" France the monarchy did not completely prevail, for the surviving provincial Estates (in Languedoc and Brittany, for instance) continued to drive hard bargains with kings and to administer taxes in their regions down to 1789. Yet another scenario unfolded in Castile, the heart of the Spanish empire, where the once instrumental Cortes faded from power in the seventeenth century as the Spanish monarchy grew weaker.

Just as we should be careful not to infer that the rise of the European tax state automatically reflected the development of absolutist institutions, we should not assume that rising tax levels were the result of increasingly efficient and centralized administrations. On the contrary, early modern tax systems were extremely fragmented. Many rulers relied on tax farming, a practice whereby taxes were franchised to semiprivate financiers who paid fixed sums of money in return for the right to collect taxes. These tax farmers were allowed to pocket the difference between the amounts of revenue they collected and the lump sums they had advanced. Not all taxes were farmed. Rulers also entrusted the task of levying certain taxes to official state administrators, but even in this case administrators could not collect taxes without the active participation of villages and local heads of household. Consider the example of the taille, the main direct tax in France from the fifteenth century to the French Revolution. Every year, the global sum of the taille was divided among the kingdom's parishes. Each parish was assigned a lump sum of money and was held responsible for collecting and forwarding that sum to tax receivers. Royal financial officials supervised the levy, pressuring recalcitrant villages and adjudicating disputes, but the crucial tasks of drawing up tax rolls and collecting revenue were left to parish assessors and collectors appointed by local village assemblies. Without the participation of thousands of village assemblies across France, even the mighty French crown would not have been able to levy the taille.

FORMS AND SOCIAL INCIDENCE OF TAXATION

The burden of the tax state was not shouldered equally by all social groups. Although it is difficult to determine with precision who paid taxes in early modern Europe, it is safe to say that the two main types of taxes, direct and indirect, were generally regressive. In both cases, common people—the peasants and artisans who made up the majority of the population—paid higher proportions of their income than did wealthy elites.

Indirect taxes, which many monarchs and town magistrates preferred because they were less intrusive than direct taxes, predominated in urban and commercial areas of Europe such as England, Italy, and the Netherlands. Taking the form of tolls, excise taxes on consumer goods, and taxes on salt, tobacco, and other goods sold by state monopolies, indirect taxes fell on consumers in a highly regressive fashion. Levied on such staples as grain, meat, beer, wine, and salt, indirect taxes imposed a proportionally heavy burden on urban workers who had to purchase basic commodities with relatively little disposable income. In the towns of Castile, where excise taxes on wine and oil could double the price of such goods, wage earners suffered a reduction of purchasing power on the order of 30–50 percent. In Paris, whose residents enjoyed privileges with respect to direct taxes, indirect taxation was rather heavy. It has been calculated that in 1789, the average Parisian head of household needed fifty-six days to work off his taxes. During periods of economic growth, indirect taxes were easier to bear, but in bad times, when wages stagnated or unemployment rose, they could become quite oppressive.

Levied on landed income and property, we might expect direct taxes to have been less regressive. But this was not usually the case, because the wealthy and powerful often held the privilege of exemption. Consider once again the example of the principal direct tax in France, the taille. The most remarkable feature of the taille was the number of people who did not have to pay it. In much of France, clergymen, nobles, bourgeois, venal officeholders, royal administrators, and residents of certain provinces and towns enjoyed at least partial exemption from the taille. This meant that the weight of the tax fell overwhelmingly on the peasantry. It has been estimated that in the late seventeenth century the taille and other direct taxes absorbed on average one-fifth of the peasantry's gross production. Wealthier peasants appear to have carried most of this burden, but the poorest peasants had a difficult time scraping together enough cash to pay even the tiniest assessments. In a hierarchical society riddled with privilege, the taille was so closely associated with low status that Cardinal Richelieu (1585–1642) believed it unwise to relieve the common people of this burden because "they would lose the mark of their subjection and consequently the awareness of their station." Similar sentiment existed in Sweden, the German lands, and Castile, where the payment of direct taxes was also a sign of common birth.

If regressive taxation reflected the steep social hierarchy of the early modern period, so too did the ways in which the state spent the tax revenue it collected. As historians have recently emphasized, monarchs not only drew the lion's share of tax revenue from peasants and artisans but, with state spending, redistributed that revenue up the social hierarchy to nobles, officeholders, and other elites. In seventeenth-century Languedoc, as much as a third of the province's tax revenue passed directly to regional notables in the form of pensions, salaries, and interest payments. Extracting and redistributing tax revenue on a massive scale, early modern states doubly reinforced the social inequalities of the age.

POPULAR TAX REVOLTS

Given the weight and incidence of taxation, it may come as no surprise that levies encountered a good deal of popular resistance in the early modern period. The medieval notion that a king was supposed "to live of his own" did not quickly fade, leading many to believe as late as the seventeenth century that regular taxation was a dangerous innovation. In such a climate, any attempt to create a new tax or increase an old one, even when the justification of military defense was invoked, could be met with great skepticism. Ever dubious and resourceful, taxpayers found ways to evade or at least minimize their fiscal obligations. Heads of households escaped full liability for direct taxes by hiding or falsely reporting their wealth or, in the case of powerful individuals, by exerting influence over local tax assessors. As for indirect taxes, smugglers formed vast underground networks that circumvented customs and excise taxes to supply consumers with untaxed commodities at lower prices.

Resistance could also take the more direct form of open revolt. In addition to, and sometimes linked to, the challenges to taxation mounted by representative institutions, popular tax revolts broke out sporadically across Europe throughout the early modern era. From the late sixteenth to the mid-seventeenth century, when intense warfare was coupled with economic and demographic crisis, a particularly destabilizing series of tax rebellions erupted in the German lands, Spain, Portugal, Naples, England, and France. It is important to note that these revolts were not irrational explosions of violence carried out by the hopelessly poor. Rather, as recent research emphasizes, revolts were deliberate political acts in which a variety of social groups participated.

The revolts that shook France in the first half of the seventeenth century are particularly well studied, and they suggest how and why uprisings occurred. It should be stated at the outset that rebellions in this period were not aimed solely at taxes; crowds also gathered to protest military conscription, the billeting of troops, high food prices, seigneurial dues, and religious heresy. But from 1630 to 1660 tax revolts were by far the most prominent form of protest in France. In this period of economic, military, and fiscal turmoil, taxpayers assembled on numerous occasions to submit petitions for tax relief to authorities. When such acts of protest proved unsuccessful, crowds gathered to keep tax officials at bay—by force if necessary. Moved by a sense of communal justice, taxpayers enacted mock trials and burned tax officials in effigy, broke into or burned down tax collectors' houses, and verbally or physically harassed collectors to run them out of town. Although the most violent incidents of collective action involved beating or stoning officials, such activity was not revolutionary in the modern sense of the term. Appealing to God, king, and custom rather than revolutionary principle, crowds believed that their attempts to block new taxes (or sudden tax increases) were part of a larger plan to restore the traditional order. "Long live the king without the salt tax," French protesters cried, looking backward to a time when the crown supposedly did not impose harmful fiscal innovations. Just because revolts were backward-looking, however, does not mean that they failed to achieve practical results. Revolts did achieve temporary successes, when tax collectors were chased out of town or when controversial tax initiatives were withdrawn. But revolts were just as likely to provoke brutal repression by the royal army.

One of the most extraordinary features of tax revolts was the participation of different social groups. It is not surprising that destitute peasants, artisans, and day laborers joined the fray, since taxation threatened to take what little cash they possessed. But in seventeenth-century France, wealthier peasants and artisans, local elites, and even nobles were similarly moved to participate in revolts or at least abet them from behind the scenes. Wealthier peasants paid the bulk of direct taxes and so had a strong interest in stopping tax increases. Noble landlords saw rebellion as a means to retain regional liberties and expand their power, but they, too, had a financial interest in tax revolts, for they competed with the crown for the economic surplus produced by the peasantry. Although nobles paid comparatively little in taxes, they understood that higher taxes on the peasantry would lead to lower rents and feudal dues. Thus, when Louis XIII (ruled 1610–1633) dramatically increased taxes in the 1620s and 1630s, many nobles supported popular sedition. Not all joined in, for some elites feared that revolt would cut off royal revenue and endanger the financial perquisites they received from the crown, but for many the prospect of losing revenue from their land outweighed other considerations.

REFORM AND REVOLUTION IN THE EIGHTEENTH CENTURY

Although traditional tax revolts died down in the eighteenth century, taxation became a key issue in the American and French Revolutions. In both cases, revolution stemmed from the tremendous fiscal burden that weighed on Britain and France as the two countries engaged one another in a series of protracted, global, and costly wars that have been likened to a second Hundred Years' War. For both countries, the financial response to the burden of war would have far-reaching political consequences.

From the Glorious Revolution of 1688 to the defeat of revolutionary France in 1815, Britain ascended to great power status on the wings of a "financial revolution" in which Parliament guaranteed the security of a permanent and rapidly expanding national debt. Although historians once believed that the spectacular growth of English public credit compensated for the country's supposedly weak tax system, today they attribute much of the success of English credit to the efficiency and reliability of taxes. At bottom, England's tax system was effective because elites consented to taxation through their representatives in Parliament. In the 1690s, for example, Parliament agreed to the levy of a land tax on the propertied classes that would spare no landowner, be he gentleman or cleric. The land tax was significant not only because it touched elites and provided an important source of revenue, especially to 1714, but also because it secured the political power of Parliament—and the landed gentry that the institution represented—in a new constitutional order. The English monarchy learned that it had much to gain financially by consulting Parliament; Parliament learned to tolerate the fiscal and administrative expansion of the English state in return for the right to scrutinize public finances. At the end of the eighteenth century, Parliament replaced the land tax with a modern income tax, a remarkable innovation that required all heads of household with annual incomes above fifty pounds to declare their wealth for assessment.

We should be careful, however, not to exaggerate the fiscal generosity of English elites. The land tax, which Parliament never allowed to be administered by a royal bureaucracy, was applied unevenly and fell dramatically over the century in proportion to total tax revenue. Likewise, the income tax was quickly repealed once France was defeated. The two taxes demonstrate that while English elites were willing to contribute direct taxes to a state in which they enjoyed representation, they did not intend to pay too much for this political privilege. Indeed, despite notable innovations in direct taxation, crown and Parliament ensured that indirect taxation, in particular the regressive excise tax, would become the true backbone of the eighteenth-century English fiscal system. Climbing to dizzying heights over the century, the excise tax raised the vast majority of the revenue that funded the loans of the Seven Years' War (1756–1763) and the American War of Independence (1775–1783). Backed by parliamentary statute and staffed by an astonishingly modern bureaucracy, the excise administration made English consumers pay for the nation's international power.

If Britain excelled in the fiscal rivalry that characterized eighteenth-century international relations, it did so despite the rebellion of its North American colonies. In light of the critical role Parliament played in lending legitimacy to English taxes, it is not all that surprising that North American colonials balked when the crown attempted to impose new taxes in the wake of the costly Seven Years' War. In the absence of colonial representation in Parliament, and with the elimination of the French threat in North America, colonials perceived the new taxes and duties of the late 1760s and early 1770s as the work of a despotic government. "No taxation without representation," they exclaimed, insisting that all British taxpayers had a right to national political representation. With the spread of such constitutional ideas, what began as a tax revolt quickly turned into republican revolution.

Taxation was also an important cause of the French Revolution. Because French kings periodically repudiated debts (and were therefore known as risky borrowers), the French royal debt was more expensive to service than English national debt, putting additional stress on the French tax system. As in England, France increasingly relied on indirect taxes over the eighteenth century, but French indirect taxes never reached the proportions of total tax revenue that English indirect taxes did. Direct taxes remained essential in France, and it was here that the French crown initiated its most ambitious reforms. The crown not only conducted land surveys in certain provinces to improve the repartition of the taille; it also created new universal taxes (the capitation, dixième, and vingtième ) aimed at individuals, including nobles, who had formerly enjoyed the privilege of tax exemption. (The creation of universal taxes in France was part of a general trend among eighteenth-century European governments to end noble tax privileges; similar reforms were instituted in Artois, Flanders, Luxembourg, Savoy, Holland, and Prussia). Although French universal taxes bolstered direct tax revenues, they were woefully inadequate to the task of funding military expenditure and debt. Even when combined with rising indirect tax revenue, they did not substantially raise the incidence of real, per capita taxation.

Looked at another way, however, the new universal taxes proved all too successful. Because they did indeed strike nobles and other privileged groups, they alienated elites who, unlike their counterparts across the channel but much like Britons in North America, did not enjoy representation in a national legislature. As a result, French courts of law became increasingly sensitive to the issue of taxation and publicized the need for an institutional bulwark against the monarchy. Seeking to fend off increases in universal taxes from the Seven Years' War on, courts disseminated subversive concepts of national sovereignty, political representation, and the rights of citizenship. In 1789, revolutionaries drew on this and other fiscal-political rhetoric to launch both a constitutional revolution, in which a National Assembly would seize the power to tax from the monarchy, and a social revolution, in which the Third Estate would claim political rights based on its tax contributions to the state. Once in power, revolutionaries abolished indirect taxes, expunged vestiges of privilege from direct taxation, and formally linked taxation and citizenship by extending political rights to taxpayers. By the late eighteenth century, taxation had become invested with revolutionary significance.

See also Absolutism ; Military ; Popular Protest and Rebellions ; Representative Institutions ; Revolutions, Age of ; State and Bureaucracy .

BIBLIOGRAPHY

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Bercé, Yves Marie. History of Peasant Revolts: The Social Origins of Rebellion in Early Modern France. Translated by Amanda Whitmore. Cambridge, U.K., 1990.

Bonney, Richard, ed. Economic Systems and State Finance. Oxford and New York, 1995.

——. The Rise of the Fiscal State in Europe, c. 1200–1815. New York, 1999. A useful collection of essays on early modern public finance in several European countries.

Bossenga, Gail. "Taxes." In A Critical Dictionary of the French Revolution. Edited by François Furet and Mona Ozouf. Translated by Arthur Goldhammer. Cambridge, U.K., 1989.

Brewer, John. The Sinews of Power: War, Money and the English State, 1688–1783. London and Boston, 1990. A compelling study of the fiscal changes behind England's rise to power in the eighteenth century.

Collins, James B. Fiscal Limits of Absolutism: Direct Taxation in Early Seventeenth-Century France. Berkeley, 1988.

Herlihy, David, and Christiane Klapisch-Zuber. Tuscans and Their Families: A Study of the Florentine Catasto of 1427. New Haven, 1985.

Hoffman, Philip T., and Kathryn Norberg. Fiscal Crises, Liberty, and Representative Government, 1450–1789. Stanford, 1994. Analyzes the relationship between fiscal and political development in England, the Netherlands, Spain, and France.

Kwass, Michael. Privilege and the Politics of Taxation in Eighteenth-Century France: Liberté, Égalité, Fiscalité. Cambridge, U.K., and New York, 2000.

Mathias, Peter, and Patrick O'Brien. "Taxation in Britain and France, 1715–1810." Journal of European Economic History 5 (1976): 601–650.

Tilly, Charles. The Contentious French. Cambridge, Mass., 1986. Contains descriptions and analysis of French tax revolts in the sixteenth and seventeenth centuries.

Tracy, James D. "Taxation and State Debt." In Handbook of European History, 1400–1600: Late Middle Ages, Renaissance, and Reformation. 2 vols. Edited by Thomas A. Brady Jr., Heiko A. Oberman, and James D. Tracy. Leiden and New York, 1994.

Michael Kwass