Looking back through the history of taxation, the words of James Madison ring true. Without taxes, the ancient powers whose mighty armies and confounding construction projects that history buffs and world travelers admire would likely have never existed. Without taxes, the history of the American colonists might have taken a different course. Proponents and detractors of taxes have existed for thousands of years. Here are some of the ways that property taxes have been assessed and collected throughout history.
Taxes in Ancient Times
The leaders in ancient empires like Egypt, Greece, and Rome all levied taxes on their people to increase the power and prestige of their kingdoms.
The First Property Tax in Egypt
Egypt was arguably the first to create direct taxes on property around 3000 BC to build grain warehouses, the pyramids and pay soldiers. Because there was no coined money at this time, the taxes were collected in the form of harvest yields, other property, or labor.
These taxes were paid at least once a year, and supervisors known as Viziers acted on behalf of the Pharaoh to collect and record the payments. During famine and other hardships, the stored grain was used to feed public workers and the poor.
Without the taxed grain and required labor, Egypt wouldn’t have flourished into a powerful ancient civilization rich with artistry and engineering marvels.
Taxing the Wealthy in Greece
Several centuries later in Greece, the wealthy were the ones to pay direct taxes called eisphorá (εἰσφορά) and liturgies. Eisphorá was levied periodically, usually during times of war. These were cash contributions calculated based on the value of their property, not their income, making them a direct tax on wealth.
Liturgies supported public works like the maintenance of a trireme (a naval ship), a chorus during a theatre festival, or a gymnasium.
While many of us today gripe about paying more in taxes, the wealthiest citizens of Greece were honored to pay and viewed it much like a philanthropist donating to a community organization today. In fact, the wealthy who participated in shouldering the financial burden of liturgies formed a voluntary committee of sorts. The “liturgical class” or Liturgy didn’t formally set requirements to join. Instead, these wealthy Greeks followed “ ideologies of expenditure (megaloprepeia) and of ambition (philotimia) which drive the liturgic ideal, give rise to individual strategies that allow each citizen, in accordance with his financial means and social priorities, to undertake, in a more or less extravagant manner, more or less burdensome liturgies.”
Not everyone joined voluntarily, though. If a liturgist felt a more wealthy citizen was shirking their financial duties, they might threaten a court proceeding called “antidosis,” which would transfer the financial burden to the other party. A jury would decide which of the two was wealthier and responsible for the liturgy. Peer pressure and the desire for prestige drove the wealthiest to continue to participate in the Liturgy for generations.
Unlike the Egyptians, these taxes weren’t collected on a yearly basis, but only when needed. Most of the economy of ancient Greece depended on trade and taxing imports and exports.
Counting People for Taxes in Rome
Direct taxes in Ancient Rome were called tributum. The tax was enforced by senatorial decree and the total owed each year varied. Some years, no tributum was levied.
The empire decided to introduce a head tax or poll tax (called a tributum capitis), but to do so had to devise a way of counting each subject whether they were a citizen or not. Given the expansiveness of the empire, asking people to travel to the capital to be counted was out of the question. So, a body of “census takers” was sent out from Rome to North Africa, Spain, Germany, Greece, Persia, and beyond. Once these census takers collected their numbers, the final results were tabulated back in Rome.
Eventually, the tributum was extended into real estate property as well (tributum soli). Other forms of taxation in early Rome included consumption taxes, customs duties, and sales taxes.
Unlike the liturgies of Greece, the tributum was deeply resented, especially aboard. The subjects forced to pay both tributum capitis and tributum soli didn’t have the same devotion or interest in preserving the legacy of the central state levying the taxes. In fact, recognized citizens of colonies were sometimes exempt from the taxes while non-citizens continued to pay. Tertullian, a prolific Christain author, called it a “badge of slavery.” Anger over taxation erupted into revolts, including the First Jewish-Roman War during Nero’s reign.
The tributum was suspended after the defeat of Macedon in 167 BC due to the increased accumulation of wealth through warfare and a decrease in legions requiring material support. However, it was reinstated to increase funds during the civil war after the death of Julius Caesar.
Taxes and the American Colonists
Like the people of ancient Judea, the American colonists revolted against the taxes imposed by a foreign power. However, taxes weren’t the cause of the American Revolution — the colonies themselves had developed a robust tax system to fund their war efforts — it was taxation without representation.
While there was some variation from colony to colony, five kinds of taxes existed at this time:
- Capitation or poll taxes – much like the tributum capitis of Rome, this tax was levied on all adult males and sometimes on slaves.
- Property taxes – depending on the item, this could be a flat rate or a rate based on value.
- Faculty taxes – called the “ancestor of the modern income tax,” these taxes were based on an individual’s earning capacity.
- Tariffs – imposed on goods imported or exported
- Excises – taxes on a specific good or activity, usually something that isn’t a necessity like liquor or gambling. Sometimes called a “sin tax,” raising these taxes was, in part, an effort to reduce the amount of the product consumed or the activity.
As the war continued, taxes on colonists increased and became hotly debated, sometimes leading to infighting. When it came to real estate taxes, many argued it was unfair to tax land on a per-acre basis and insisted on using a value system for calculating taxes.
The federal government levied a national tax on land in 1798, 1814, 1815, 1816, and 1861. While federal taxation on land was particularly unfavorable among citizens, the system of collecting local property taxes has persisted, most likely because the money is spent locally on projects that improve the community’s amenities.
Standardizing Property Taxes in the United States
It wasn’t until the beginning of the 18th century that states began to adopt uniform taxation based on the property’s value. This applied to all wealth – real, personal, tangible, and intangible property. Uniformity meant that each taxpayer-funded government services based on his or her proportionate wealth.
Illinois was the first in 1818, followed by Missouri in 1820 and Tennessee in 1834 to replace a provision requiring that land be taxed at a uniform amount per acre with a provision that land be taxed according to its value.
This was the beginning of ad valorem taxing. By the end of the 19th century, thirty-three states had required that all real property be taxed equally by value.
In the years after the American Revolution, property tax, especially real estate taxes, was instrumental in stabilizing local government revenue because real property was fixed, visible, and its general value was well known. Even as new local governments formed, taxing codes were well established to determine which parcels fell under which jurisdiction. Which taxes would be levied on property usually depended on its proximity to beneficial community projects.
In the 20th century, state governments began to impose limits on the total rate or amount of real estate taxes that a local taxing authority could impose. Unintentionally, these limitations led to the creation of additional special taxing districts. After World War II, state and local governments increased their budgets and tax collection. To fund new programs and take advantage of rising property values, assessments and tax rates quickly rose. Reports of homeowners forced to sell their homes because of rising taxes splashed across newspaper headlines.
Discovering Tax Issues before Buying a Home
In some areas, a property may be taxed by multiple townships, villages, cities, counties, school districts, special taxing districts, or other classes of municipalities for services like water, irrigation, roads, parks, libraries, schools, fire protection, health services, pest control, and countless other services.
When purchasing a property, new homeowners need to understand the tax obligations that will come with it. Before closing, a title agent or real estate attorney will gather all the tax information that could impact a new owner’s title rights. In addition, reports like Tax Certificates from PropLogix provide detailed information about the taxing authorities for a property.
Each property is unique, including its tax history. In some cases, additional information provided by a land survey or title report will warn of tax issues a new owner may be responsible for paying if it isn’t resolved before closing.
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