Tax farming is a system where the state, usually a ruler or oligarchy, grants the right to collect taxes to a private person or group of individuals. In theory, this agent collects the taxes and hands them to the state, keeping a percentage for his fee. The tax farmer is eager to make sure the taxes are collected so he does a really good job collecting those taxes. Since the tax farmers are usually closer to the people being taxed, they are going to be better at unearthing the various tax dodges cooked up by the people, thus avoiding the problem of tax avoidance.
This was common in the Bronze Age and flourished from time to time in various places into the late Middle Ages. The Italians still maintain a form of it in their banking system, where the small local banks operate as a taxing authority for certain transactions. The remains of this practice are still with us in the form of business and sales taxes. The retailer is basically a tax collector. The difference is the business collecting sales and employment tax is not getting a commission. They are forced to do it by the state as a condition of doing business.
Like all solutions, it came with trade-offs. The king may have lacked the communications systems and granular knowledge of the local economy to efficiently collect his own taxes, but he gave away some degree of his authority when he resorted to tax farming. He also gave away some portion of his tax revenue to the tax farmer. Since the power to tax is the power to rule, the king was also ceding some of his own power to others, who could one day use those powers against him. In other words, the king was trading power for money, which is always a risky trade-off.
Tax farming is something to keep in mind when reading stories like this one from Hollywood. Of the eight people in the story, three run cable empires. Two run empires that piggyback on the cable monopolies. That means five of the eight most powerful media men in America base their power on state-granted cable monopolies, which are really just updated forms of the old tax farm concept. Instead of the state taxing you through your cable and internet, they grant that right to these companies, who kick a portion of it back to the government in the form of bribes and taxes.
It is tempting to resist this comparison because the cable company is not banging on your door, demanding that you give them half your crops. It does not feel like a tax, but income taxes do not feel like a tax either. You never see them. They just happen behind the scenes. Most people are completely unaware of the taxes on their wages. They see what is on their stub, maybe, but they do not see the laundry list of taxes paid by their employer. Those of you who sign the front of paychecks know the stuff on the pay stub is just the tip of the iceberg.
Similarly, as a consumer of pop culture you want to watch TV and go on-line so you get cable. In most areas of the US, there is one cable company. They do not just sell you the content you want, they sell you a package that you have to buy whether you watch it or not. You pay for ESPN, for example, even if you never watch sports. You pay for the parade of freaks on the news channels, even if you are a sensible person who gets his news on-line. That is a tax, no matter what they call it. You are required to pay for these channels even though you do not want them.
Here is a little math. The average cable TV bill in America is now over $100 per month. There are roughly one hundred million cable homes in America, which means $10 billion per month flows into the cable companies via subscriber fees. Then you have the internet access portion which is about half that number. When you have the right to tax $150 billion from the public, you have a powerful tool at your disposal. It is no wonder that five of the eight most powerful media moguls are in the cable rackets. They have been granted the power to tax.
This would be just another swindle the Billionaire Boys Club is running on the American people, except that most people still get their news and culture through the television. All of those moguls are raging left wingers, who use their billions to finance their favorite politicians and pump into your home their ideas about how you should live. It is not an accident that most of what turns up on television looks like it was dreamed up by the sophomores in the women’s studies department. The modern tax farmer does not just have the right to tax the people in his domain. He gets the right to tell them how to think.
Lot of people don’t know you can get 100’s of channels free, that you pay for through cable or satellite. All you need is a decent Yagi type Digital TV antenna. RCA sells one for $48, they have a booster too. But all you need is a tall mast, made from conduit. The taller the more channels. And the satellite dish mount you have works perfect for the Yagi, and a taller mast. I live in rural WV, we get 54 free channels on a 10 ft mast mounted on the roof ridge. Free. Then we bought a flat screen… Read more »
Google LEAF ANTENNA.
Dan Kurt
A couple of quibbles…Most states (I think) allow businesses to take a discount on the sales taxes due and collected. In Wisconsin it is .5% with a maximum of $1000 per month. Of course, this doesn’t even come close to what it costs to account for taxes collected, not to mention the convoluted rules involved regarding who owes and who doesn’t, what exactly is taxable and what isn’t. It’s a royal pain the arse. It’s only going to get worse if a national sales tax or VAT tax is levied. Lastly, I absolutely despise all those obscure, penny-ante taxes listed… Read more »
This is why leftwingers and Euros (BIRM) love the Value-Added Tax. I remember my first trip abroad, as a wee lad. It was great! No sales tax, no tip, you just got the bill and handed over the weird Monopoly-looking money and a handful of coins that look like miniature stop signs. It was only later, when I realized I was paying the equivalent of US $12 for a freakin’ beer, that the tax burden became evident. If you really want to end the leviathan state, simply eliminate withholding. Every April 15, you have to add up your earnings for… Read more »
Way back in the olden thymes I was living and working in New Hampshire. Our counterparts from Montreal were down for a meeting and the subject of health insurance came up. They started mocking us for not having government health care. One of the guys pulled out his pay stub and show them the tax portion. They got very quiet. At the time, Canada charged 30% federal tax plus a 17% provincial tax, paid in cash or beaver pelts. In tax free NH, you paid the Feds and that was it. Suddenly free health care looked very expensive to our… Read more »
As I have mentioned before, attending university in Germany is free to students who are smart enough to get in. Yet it’s always interesting to listen to these often liberal and progressive ‘know-it-all’ students go on about how we should all be more socially conscious and take care of refugees and the poor and every social miscreant they pass on the street. At the same time they drone on about the great job they will have when they graduate and the flat they will live in and the car they will drive. And when they end up in the ‘real’… Read more »
I call it the curse of third party payments. When “the government” pays for stuff, it masks the cost, at least for a little while. Here in the states, we have one party promising “free” stuff and one party promising low taxes. The result is $20 Trillion in Federal debt and tens of trillions more in state and local debts.
Here’s a delight we Brits have to endure. A litre of petrol in the UK (I’d prefer gallons but we must be more European so so we have to bow to Napoleon’s heritage) has over 40 per cent of the price at the pump as fuel duty. In other words, tax. On top of that, the government adds its customary 20 per cent Value Added Tax, so the motorist is effectively paying tax on tax. As the car is taxed by the state already then even filling it up is a tax event of super proportions.
In America, every gallon of potable alcohol is taxed roughly $24. The cost is about $3 per gallon. That means a ten dollar bottle of cheap liquor is five dollars in tax, give or take. It is not stated anywhere on the bottle. Then there is cost of collecting that tax which is substantial. People in the alcohol business have special accounting people who do nothing but account for every drop of alcohol. The Feds come in annually to audit their books and the fines are draconian.
I used to keep books for a bar and there’s an astonishing amount of bureaucracy on those alcohol sales too. Normally if you’re a day or two late paying a vendor, it’s not a big deal. If you’re even a little late paying an alcohol vendor, they report you to the state liquor commission and no alcohol vendors are allowed to deliver to you unless you greet them with cash on delivery. I was taking over for an incompetent temp and resolving the liquor situation was a huge headache.
In Germany every household is obliged to pay a TV license fee which is used to pay the German public broadcasting services, similar to the UK’s BBC. The license fee is used to fund the public broadcasters ZDF and Deutschlandradio as well as the nine regional broadcasters of the ARD network, who altogether run 22 television channels. Within Europe, Germany’s fees are considered average; Switzerland charges €385 and Austria €278 a year respectively. However Germans have to pay more than the British (€179), French (€129), and Italians (€110). The license fee since 2009 had been €5.76 a month for a… Read more »
Oh dear lord, what have we allowed on our watch. I don’t have cable thankfully.
LetsPlay gets it right. We should start referring to DC as the “center” like communists did to the party apparat in Moscow. Tax farming, or call it what you will, is just part of the intersection of big business and government, in my mind, a form of incorporated socialism, with government, business and media all run by the same new class.
What is to be done? as Lenin asked? Beats the hell out of me. I’m beginning t think that withdrawing my vote is a start but that goes against a lifetime’s habit. Tim
@ Tim – Not voting is the worst thing you can do and it is exactly what the elites prefer! The fact less than 40% of the 18-24 year old Brits who favored “remain” didn’t vote is telling. And yet they screamed the loudest. I would agree the vote for your president may be a difficult pill to swallow but people must remain engaged at the local and state elections. Little Switzerland is a great example…the cantons vote on everything.
I’ve never had cable but I quite agree. However I can provide an example of how much tax is hidden within the products we purchase: Some twenty, or so, years ago (so I’m, of course going to be talking 1990s dollars.) I did a fair amount of traveling in the Russian Far East. As an unapologetic smoker I’d buy Camels, in Russia, for the equivalent of fourteen cent a pack in US dollars. Here is Alaska then I’d pay around a buck fifty a pack, if I remember right, it might have been quite a bit higher, Alaska raised their… Read more »
http://www.jewishencyclopedia.com/articles/14273-tax-gatherers “During the Middle Ages the position of tax-collector was often filled by Jews. Mention is made of Jewish tax-collectors in France as early as the sixth century (Gregory of Tours, “Historia Francorum,” vii. 23). In 587 the Council of Mâcon issued among other prohibitions one against farming the taxes to Jews. That this prohibition was disregarded is seen from the fact that the Council of Meaux (849) deemed it necessary to renew it. The collection of Jewish taxes was always entrusted to Jews; during the reign of Charles V. (1364-80) Menassier of Vesoul was receiver-general of the Jewish taxes… Read more »
In the UK, as probably well known to many, we have a television tax. This is via the BBC, and works as a ‘licence’ to the point that as all televisions are capable of picking up BBC’s output (the whole range from excellent documentaries on wildlife and period dramas to unfunny left-wing ‘comedians’ and utterly agenda-ridden ‘news’ coverage packed with socialist tripe — as Al-Beeb gets a kickback from the EU you can guess which side they are on in their supposedly unbiased reporting) then everyone whether they watch or not must pay. I believe there are a handful of… Read more »
At one point, the most common charge in British courts was failure to pay the TV tax.
“What are you in for?”
“I don’t watch the tele”
“You monster!”
David Friedman said “Property rights are not the rights of property; they are the rights of humans with regard to property. They are a particular kind of human right.” Your guns, your money, everything you own, it is property, that is the first thing. I think the further the spirit advances in the thought and act of defiance to tyrants, the greater the increase of adversarial nature to eradicating that defiance, and resistance becomes manifest in people. That is what being a dirt person is. It is an evolution of insurgency that is required, it is the original open source… Read more »
@ the Zman – I am surprised you have not capitalized on the real significance of the Brexit with regards to the superiority of the American form of democratic government over the clear failure of the EU. While you and others often complain about what’s wrong with America, Brexit is a clear indication of what is good about it; fifty independent, self governing states, still functioning in unison for nearly 250-years. The Euro-experiment as we know it today, barely made it two decades and already it’s off the rails with one if it’s most significant members leaving. As the Brits… Read more »
I hate to be the one to burst your bubble but the truth must be told … America is really more like the EU that you might think. Washington DC is like Brussels where cretins, lot of faceless, nameless bureaucrats and political appointees create laws but live like royalty and sneer down from their lofty perches at the small people out beyond the safety fences. They care little for what the little people think. The Constitution is not respected or applied any longer. Presidents, Supreme Court Justices, and politicians, as well as military commanders take the oath to uphold and… Read more »
@ Infidel – Brexit, Trump and the AfD are reactions to bad decisions and bad policies, not a bad government. Fundamental democratic republics, as defined in our respective countries constitutions, have proven to work quite well. Unfortunately the EU that has attempted to subvert, pervert and twist it into something very different – bordering more and more closely to a fascist state. America, despite it’s faults, is not quite there yet. The Brits were smart enough to recognize it, I believe you Americans are too. You just haven’t reached the pain threshold the UK did. We Germans have lived through… Read more »
Your are correct Karl that the US is on approach to becoming exactly like the EU. That is what our “Left” desires. Many of us see it happening and are frustrated that our efforts at electing representatives to take action to stem and turn the tide have come to nothing. In fact, these traitors, RINO’s in our parlance, have aided and abetted the enemy. And they are the enemy because they want to cause us to lose our freedom. Many Americans would rather die standing than live kneeling. It does take reaching a pain threshold to force us creatures to… Read more »
I think you will find every younger generation has sneered at the old. There are quotes that go back to ancient Greece on that topic. But, as I posed the question before, can a nation (America or the EU) of over 300-million people be effectively ruled by a “small” government? The days of grand European wars are over. So it will be interesting to see if the EU de-evolves back into a collective of cooperative nations.The Brexit put the smell of liberty in the air, and in a prison, that’s not a good thing.
To your original question, I do believe that a large country like America can be ruled effectively by small government who has clearly defined goals. As stipulated in our Constitution, those goals are well defined. As a Republic, the rest of the details should be left to the States. It all depends on a decentralized form of government and shared responsibilities. I think where failure comes in is when a small group of people based in a central location try to manage the affairs of many over a tremendously large area with the cajones to think they know what is… Read more »
Never forget that Americans have the benefit of a nearly 250-year old Constitution. Europeans have had to re-write theirs several times in just the past 100-years. America still has the dollar while Germany has already gone through four currency changes in the past 100-years alone. Europe, despite it’s ancient roots, is still evolving. It’s what your forefathers went through under the Brits, but on a multinational scale. The US remains unique that it can manage 300-million people because it has the advantage of a common Constitution and I would also argue, a common language. What you are witnessing is 27-nations… Read more »
Thank you for that overview. Quite compelling bit of history. And it makes my point that countries have never developed their own form of government and economy before being offered the panacea of a “Unified” and common market. I personally never believed that even the Euro, a common monetary unit could be agreed upon by all the European countries. The fact that many did was amazing but how long it will survive is still in question as is the life span of the EU.
Another area where tax farming takes place is in health care. It is a hyper-regulated monopoly set up to benefit those licensed in the monopoly and the government, which protects it, and profits from the closely watched transactions and controls. Consider this: In France the salt monopoly was granted to the farmers general who enforced the gabelle. Consumption went down. The government then required people to buy salt. Same with health insurance today.
Not only that, but it (health services) and residential housing are pretty much it as far as our GDP goes. So, eliminate those subsidized industries, and … you got nuthin’.
http://healthblog.ncpa.org/health-services-50-percent-of-gdp-growth/
https://mishtalk.com/2016/06/28/third-estimate-of-first-quarter-gdp/
Since young voters or potential voters don’t subscribe to the media/entertainment companies which continue in their destruction of American liberty at nearly the rates that old folks do, even old folks who mistakenly believe they aren’t raping the young with more debt and more finger pointing instead of less debt actualized, should applaud the effect of reducing the influence of the “gatekeepers.” This isn’t to claim these same young don’t Facebook and Apple and Google ergo providing different Leftists power, and the distinction matters. As Michael C. said, the young overtake the old, it’s natural. Unless the old are like… Read more »
Cord cutting is a real thing, but it is not enough of a thing yet. About 7% of homes that could have cable do not have cable. It will grow over time and maybe even reach critical mass as other services become better. But, entrenched interests tend to fight back.
Elon Musk is another example of a tax-farmer: everything he does is government-subsidized, IOW we’re paying the freight for this famous “entrepreneur”.
Elon Musk is not a tax farmer. The things he gets subsidies for are things we as a country have agreed are important for the future. I feel that subsidies to all his pursuits are worthy. We eventually need to have some sort of long range space travel to protect us from extinction. We need to move to electric cars or at least to some sort of fuel that can be made by electrical power. Solar panels for homes are great for getting the borg off your back. I know of people who run their homes on solar and have… Read more »