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Global Taxation
 Global Taxation
How Modern Taxes Conquered the World

Edited by
PHILIPP GENSCHEL AND LAURA SEELKOPF

1
 3
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 Contents

List of Abbreviations vii

List of Contributors ix
Preface xi
1. Global Pathways to Modern Taxation 1
Philipp Genschel and Laura Seelkopf

PART I VARIANCE ACROSS SPACE AND MODE

2. War and Modern Taxation 43

Jakob Frizell
3. Fiscal Development under Colonial and Sovereign Rule 67
Ewout Frankema and Marlous van Waijenburg
4. Trajectories of Taxation in Uganda and Senegal 98
Klaus Schlichte
5. The Historical Roots of Post-Communist Taxation 121
Arpad Todor

PART II VARIANCE ACROSS TIME AND TAX

6. Democratization and Tax Innovation 141

Junko Kato and Miki Toyofuku
7. Recessions and Tax Introductions 159
Andrea Papadia and Zbigniew Truchlewski
8. Political Institutions and Income Taxes 178
Per F. Andersson
9. The Rise of General Consumption Taxes 199
Joseph Ganderson and Julian Limberg
10. Social Security Contributions and the Fiscal Origins of
the Welfare State 223
Achim Kemmerling
vi 

Chapter 2 (Appendix A) 245

Chapter 2 (Appendix B) 251
Chapter 5 (Appendix C) 264
Chapter 6 (Appendix D) 266
Chapter 6 (Appendix E) 267
Chapter 7 (Appendix F) 268
Chapter 8 (Appendix G) 270
Chapter 9 (Appendix H) 272
Chapter 10 (Appendix I) 275

Index 281

Online Appendices A–I (HYPERLINK www.oup.co.uk/companion/Genschel&

Seelkopf)
 List of Abbreviations

CIT Corporate Income Tax

COW Correlates of War
FWA French West Africa
GDP Gross Domestic Product
GDPpc Gross Domestic Product per capita
GST General Sales Tax
IFI International Financial Institution
ILO International Labour Organization
IMF International Monetary Fund
INH Inheritance Tax
LDP Liberal Democratic Party
MENA Middle East and North Africa
MPLA People’s Movement for the Liberation of Angola
NRM National Resistance Movement
Obs. Number of observations
OECD Organisation for Economic Cooperation and Development
PC Per Capita
PIT Personal Income Tax
SAP Structural Adjustment Program
SSC Social Security Contributions
SSL Social Security Legislation
St. dev. Standard deviation
TID Tax Introduction Database
UNITA National Union for the Total Independence of Angola
US United States of America
USSR Union of Soviet Socialist Republics
V-Dem Varieties of Democracy
VAT Value Added Tax
VS Versus
WAEMU West African Economic and Monetary Union
WWI First World War
WWII Second World War
 List of Contributors

Per F. Andersson is a Postdoctoral Researcher at the Department of Political Science,

Copenhagen University and at the Department of Political Science, Stockholm University.
Ewout Frankema is Professor and Chair of Rural and Environmental History at
Wageningen University and Research Fellow of the Centre for Economic Policy Research.
Jakob Frizell is a Doctoral Researcher at European University Institute in Florence.

Joseph Ganderson is a Research Officer at the European Institute, London School of

Economics and Political Science.

Philipp Genschel is Professor and Chair of European Public Policy at the European
University Institute. He is currently on leave from Jacobs University Bremen and the
University of Bremen.
Junko Kato is Professor of Political Science at the Graduate School of Law and Political
Science, the University of Tokyo.
Achim Kemmerling is the Gerhard Haniel Professor for Public Policy and International
Development, and Director of the Willy Brandt School of Public Policy, University of
Erfurt.
Julian Limberg is a Lecturer in Public Policy in the Department of Political Economy,
King’s College London.
Andrea Papadia is a Postdoctoral Researcher at the Economics Department, University of
Bonn.

Klaus Schlichte is Professor of International Relations and World Society at the Institute
for International and Intercultural Studies (InIIS), Bremen University.

Laura Seelkopf is Assistant Professor of International Political Economy at the School of

Economics and Political Science, University of St Gallen.
Arpad Todor is a Lecturer in the Political Science and European Studies Department at the
National University of Political Studies and Public Administration of Romania.
Miki Toyofuku is Assistant Professor of Political Science at the Faculty of Core Research
Human Science Division, Ochanomizu University.
Zbigniew Truchlewski is a Research Officer at the European Institute, London School of
Economics and Political Science.
Marlous van Waijenburg is Assistant Professor in the Business, Government, and
International Economy Unit, Harvard Business School, and affiliate Assistant Professor
in the Department of African and African American Studies, Harvard University.
 Preface
Philipp Genschel and Laura Seelkopf

For an edited volume you just need two things: a couple of papers of roughly equal
length and a stapler to put them together. This, at least, is what you think before
actually trying to edit one. Once you do, it turns out you need more.
The first thing you need is an idea. The idea for this volume grew out of the
collaboration of the two editors at the Collective Research Centre ‘Transformations
of the State’, funded by the German Research Foundation and hosted by the
University of Bremen and Jacobs University Bremen (SFB 597), 2011–14. The
Centre compared trajectories of state building and transformation across advanced
Western democracies. This was interesting as far as it went but raised the question
how these trajectories compared to other parts of the world. Since both of us had
worked on taxation before, we decided to approach this question through a tax lens.
Since Seelkopf is a quantitatively inclined social scientist, we decided to create a new
(‘novel’ as it is called nowadays) dataset for this purpose. Since Genschel is more
qualitatively inclined, we decided to give this dataset historical depth and make it
attentive to contextual detail. Thus, the project of a Tax Introduction Dataset (TID)
was born. The TID would record the historical date of first, permanent introduction
of six key taxes of the modern state (personal income tax, corporate income tax,
inheritance tax, social security contributions as well as general sales taxes and the
value added tax) for a global set of countries from the mid-eighteenth century to the
present day. This data would then enable us to study, together with others, the
timing, the sequence, and the correlates of tax innovation across time and global
space in a joint volume.
The next thing you need is money. While the idea behind the volume was
simple, its implementation was not. First, we needed time and money to put
together the TID. Then we needed time and money to put together the book on
the basis of TID. It was our good fortune that the European University Institute
(EUI) generously provided both. In 2014, it hired Genschel as a professor of
European Public Policy. In 2016–18, it invited Seelkopf to Florence first as a Max
Weber Fellow and then as a Jean Monnet Fellow. The EUI Research Council
offered two grants to pay for the collection and coding of the TID data, 2016–18.
The EUI’s Robert Schuman Centre as well as the new School of Transnational
Governance paid for various meetings and workshops to vet the TID and to
discuss the contributions to this volume. The Ludwig Maximilian University
and the German Research Foundation (SFB 1342) funded the final authors’
workshop in Freising (near Munich) in May 2019. We are very grateful to all of
xii 

our funders for their support. This volume would not have been possible without
their generosity.
Finally, the perhaps most important ingredient to an edited volume is people
who do the editors’ bidding. In our case, this included not only scholars capable
and willing to write chapters according to our specifications and based on our
data. We also needed help with collecting and coding this data in the first place.
Our first debt here is to Hanna Lierse who collaborated with Seelkopf on a
prototype of the TID in Bremen in 2014. This prototype constituted a major
achievement in its own right (Lierse and Seelkopf 2014; Seelkopf et al. 2016;
Seelkopf and Lierse 2020) and provided the basis for our work in Florence. Next
we would like to thank our research assistants Edgars Eihmanis, Joe Ganderson,
Julian Limberg, Youssef Mnaili, and Paula Zuluaga, all of them doctoral students
at the EUI’s Department of Political and Social Sciences, for their dedication and
zeal. With the enthusiasm of young age, they ploughed through libraries, archives,
and, most importantly, the internet to find information on tax events in faraway
places and categorize them according to the strict, and at times arcane, rules of the
codebook. They made the TID possible, and helped with its first public presenta-
tion (Seelkopf et al. 2019). Moritz Bubek ran the technical side of the data set.
Without his many weekend sessions we would have been at a loss. We are also
grateful to our authors who worked with us on the book for more than two years
patiently and with perseverance. They taught us things to do with TID that we had
never thought about. We thank them for their creativity, ingenuity—and stamina.
Finally, we would like to thank the many people who helped with this project
without being either a research assistant or an author. Brigid Laffan left us in
complete freedom but was always available when we needed help (often in
monetary form). Ken Scheve provided friendly advice and encouragement at
various points of the project. Hilary Appel, Dorothee Bohle, Regina Grafe,
Didac Queralt, and Moritz Weiss gave us valuable feedback at the different
workshops. Yanmin Choo took a close look at the TID in summer 2019 and
alerted us to various bugs we had overseen. Two anonymous reviewers gave us
excellent comments and suggestions. Angelika Lanfranchi provided administra-
tive support noiselessly and efficiently. If you ever wondered what soft power is,
do a case study on her. Paula Zuluaga polished the final manuscript for submis-
sion. Dominic Byatt of Oxford University Press chaperoned it through the
proposal and production stage and was a great source of support in general.
  xiii

References

Lierse, Hanna, and Laura Seelkopf. 2014. Tax Introduction Database (TID). Version
13.11.2014.
Seelkopf, Laura, and Hanna Lierse. 2020. ‘Democracy and the Global Spread of
Progressive Taxes’. Global Social Policy. Online first. https://doi.org/10.1177/
1468018120911567.
Seelkopf, Laura, Hanna Lierse, and Carina Schmitt. 2016. ‘Trade Liberalization and the
Global Expansion of Modern Taxes’. Review of International Political Economy
23 (2): pp. 208–231.
Seelkopf, Laura, Moritz Bubek, Edgars Eihmanis, Joseph Ganderson, Julian Limberg,
Youssef Mnaili, Paula Zuluaga, and Philipp Genschel. 2019. ‘The Rise of Modern
Taxation: A New Comprehensive Dataset of Tax Introductions Worldwide’. The
Review of International Organizations. Online first. doi:10.1007/s11558-019-09359-9.
 1
Global Pathways to Modern Taxation
Philipp Genschel and Laura Seelkopf ¹

1.1 Money and the State

There is no alternative to the state. Whatever form of political organization

societies may have taken in the past—tribe, feudal order, theocracy, city state,
empire—today they are invariably organized as states. The ‘construction of states
changed everything’ (Hall 2015, 63). States can promote peace more effectively
than any alternative form of political organization but also sustain war and
violence at much larger scales. States can act as powerful engines of economic
modernization and social advancement but they can also throttle progress and
immiserate societies. They can guarantee political rights or undermine them,
facilitate democratic self-government or enforce autocratic rule, create collective
identities or destroy them.
Whatever states do, they need money to do it. Money gives them the capacity to
act, to hire soldiers, civil servants, and educators, to construct large-scale admin-
istrative infrastructures, to project authority domestically and abroad, and to
provide public goods and services. No money—no governance: a state’s capacity
to act hinges crucially on its fiscal capacity.‘[T]he revenue of a state is the state’
(Burke 1790, 334).
The history of the state is intimately connected to the development of its
revenue instruments (Schumpeter 1976; Tilly 1990; Dincecco 2009; Rogers and
Weller 2014; Levi 1989). This development is punctuated by a few momentous
transitions from old to new sources of funding: from the private funds of the ruler
(the king’s own domains) to genuinely public revenues, from non-tax revenues
(plunder, tributes, monetary debasement, sales of public office, monopoly rents,
public enterprise) to tax revenues, and from narrow-based ‘pre-modern’ taxes
(including the tithe, forced labour, window taxes, head taxes, stamp taxes, tolls,
trade taxes, excises of all sorts) to broad-based ‘modern’ taxes (income taxes,
general consumption taxes, wealth taxes, and social security contributions).
If the Western experience is any guide, the last transition was the most
consequential of all: the introduction of modern taxes took the state’s fiscal

¹ Comments by the authors of this volume as well as by two anonymous reviewers are gratefully
acknowledged.

Philipp Genschel and Laura Seelkopf, Global Pathways to Modern Taxation In: Global Taxation: How Modern Taxes Conquered
the World. Edited by: Philipp Genschel and Laura Seelkopf, Oxford University Press. © Oxford University Press (2021).
DOI: 10.1093/oso/9780192897572.003.0001
2     

capacity to a completely new level, expanding its revenue potential beyond

anything previously conceivable and furnishing it with a rich toolkit of redistribu-
tive instruments. Modern taxation enabled the emergence of big government as
we know it today: no Western state can do without it.
The question is, of course, whether the Western experience is any guide. The
common distinction between the ‘West’ and the ‘rest’, between ‘developed’ and
‘developing’ countries, between the Global ‘North’ and ´South’ may suggest that it
is not. Is this true? Do fiscal developments in non-Western parts of the globe
follow the Western script or do they follow their own logic? Are there differences
in the timing, the substance, and the correlates of tax modernization or are
patterns quite similar? How far do Western concepts travel without being
stretched beyond recognition (Sartori 1970, 1034)? The chapters of this volume
map and explain the transition to modern taxation across space, time, tax types, as
well as across sovereign and colonial jurisdictions in order to gain a better
understanding of the global spread of the state. For this purpose, they all draw
on a new comprehensive Tax Introduction Dataset (TID) (Seelkopf et al. 2019;
Genschel and Seelkopf 2019).
In this introduction, we prepare the conceptual and empirical ground for the
volume. In section 1.2 we sketch our theoretical point of departure and summarize
the main findings of the book. In section 1.3, we clarify the notion of ‘modern’
taxation and explain our data set. In section 1.4, we map the diffusion of modern
taxes across time, space, taxes, and modes of introduction (sovereign and colo-
nial). In section 1.5 we review the explanations offered by the chapters. Section 1.6
points to open questions and possible extensions. Section 1.7 concludes with ten
take-home messages.

1.2 Blind Spots

Ever since Joseph Schumpeter highlighted the ‘causal . . . [and] symptomatic sig-
nificance of fiscal history’ (Schumpeter 1976, 331; our translation), experts from
various social science disciplines have focused on a few key variables to explain
fiscal development. War, socio-economic modernization, and democratization are
perhaps most prominent among them. ‘Bellicist’ scholars see the interaction of
war-making and state-making as a main driver of fiscal innovation and tax
introduction (Tilly 1990; Dincecco, Federico, and Vindigni 2011; Dincecco and
Prado 2012; Scheve and Stasavage 2010). Students of economic development
claim that secular increases in economic wealth and the functional differentiation
of society fuel fiscal development and change (Hinrichs 1966; Wagner 1892;
Prichard et al. 2014; Karceski and Kiser 2020). Scholars of political institutions
have looked into the influence of regime differences between democracy and
autocracy to explain differences in revenue and redistribution (Acemoglu et al.
      3

2015; Cheibub 1998; Slater et al. 2014). In this section we review shortcomings of
these literatures, explain our approach to overcoming them, and preview the
analytical and empirical value added of the chapters of this volume.
The extant literature on fiscal development suffers from four common empir-
ical biases that greatly limit its generalizability. The first bias is geographical. Most
historical research has focused on the fiscal experience of a small sample of
advanced Western countries (e.g. Levi 1989; Peters 1991; Steinmo 1993; Aidt
and Jensen 2009b; Dincecco and Katz 2016; Scheve and Stasavage 2016). This is
understandable given the relative scarcity of historical data on the fiscality of non-
Western countries. Yet, it makes it difficult to set Western findings into a global
perspective. Do Western trends represent a general developmental pathway or a
unique evolutionary sequence? Do war, modernization, or institutional change
trigger similar tax policy reactions everywhere?
Second, to the extent quantitative studies analyse fiscal development in global
country samples, they tend to suffer from a recency bias (Cheibub 1998; Kenny
and Winer 2006; Keen and Mansour 2010a; Keen and Mansour 2010b; Genschel
and Seelkopf 2016; Bastiaens and Rudra 2016). While international organizations
such as the International Monetary Fund (IMF) and the Organisation for
Economic Cooperation and Development (OECD) routinely provide comparative
revenue data for large country samples, these data often go back only a couple of
decades. The same holds for the statutory tax rate or tax base data provided by
international consultancies such as KPMG or PWC (KPMG 2020; PWC 2020;
University of Michigan n.d.).² This makes it hard to put contemporary findings
into a historical perspective. Do war or democracy trigger the same fiscal effects
today as a hundred years ago?
A third substantive bias concerns the taxes covered. Most fiscal research has
focused on just two taxes: the personal income tax as the hallmark of progressive
taxation (e.g. Ganghof 2006; Aidt and Jensen 2009b; Scheve and Stasavage 2012;
Mares and Queralt 2015) and the VAT as the now dominant form of consumption
taxation (e.g. Kato 2003; Beramendi and Rueda 2007; Keen and Lockwood 2010;
Kemmerling 2017). The development of other important taxes is largely ignored.
Examples include the corporate income tax, arguably the lynchpin of modern
capital taxation, and social security contributions, which often raise more revenue
than the personal income tax. It also includes (non-VAT) general sales taxes even
though they often prepared the ground for the value added tax (VAT) politically
and conceptually. It is not immediately obvious that factors associated with the rise
of personal income tax or VAT will also predict the introduction of these ‘forgotten
taxes’. The analysis of the modern tax state remains seriously incomplete.

² Some scholars have recently tried to combine global scope with historical depth. However, the
country sample remains restricted to mostly European and Latin American countries (see Andersson
2018; Beramendi et al. 2019).
4     

Finally, there is a pervasive nationalist bias in the fiscal literature: national

borders are taken for granted and tax policy change is conceptualized as domestic
politics within these borders (Mares and Queralt 2015; Scheve and Stasavage 2016;
Steinmo 1993; Peters 1991; Seligman 1911; Kennan 1910). This ‘methodological
nationalism’ (Wimmer and Schiller 2003, 576) makes sense for dominant Western
states of long historical gestation such as Britain and France, i.e. for states that
have been preferred subjects of fiscal sociology. It makes much less sense for
countries in Central or Eastern Europe whose national boundaries have changed
constantly over the past centuries (Todor, Chapter 5, this volume), or for the
former colonies in Africa and Asia where modern taxes were often introduced as a
matter of colonial imposition or international power rather than sovereign deci-
sion (Frankema and van Waijenburg 2014; Gardner 2012).
The purpose of this volume is to avoid these biases in order to provide a truly
global perspective on state transitions to modern taxation. The chapters draw their
independent variables largely from established theories: they look into wars,
recessions, and other fiscal shock events; they gauge the impact of socio-economic
modernization and social differentiation; they explore the effects of democratic
institutions and electoral accountability. Yet, they exercise these theories on a new
measure of the dependent variable that is more comprehensive in terms of
territorial, temporal, substantive, and modal coverage than previous data. This is
the TID (Seelkopf et al. 2019; Genschel and Seelkopf 2019).
The TID records the historical dates of the first permanent introduction of six
main modern taxes in 220 jurisdictions worldwide, 1750 to 2018. The six taxes
include personal income tax (PIT), corporate income tax (CIT), inheritance tax
(INH), social security contributions (SSC), general sales tax (GST) and value
added tax (VAT). Importantly, the TID covers not only sovereign tax introduc-
tions by fiscally independent states but also non-sovereign colonial introductions
and imperial impositions. TID is the most comprehensive dataset of its kind. No
other source matches its geographical, historical, and substantive breadth
(Seelkopf et al. 2019, Table 1). Based on this data, the chapters in this volume
advance the fiscal literature both empirically and analytically.
Empirically, the chapters show that modern taxation truly is an ‘evolutionary
universal’ (Parsons 1964). Rather than emerging in specific (Western) countries
under specific conditions only, modern taxes are adopted virtually everywhere
under a broad set of circumstances. This does not mean that these taxes will always
have the same fiscal implications everywhere. It just means that there seems to be
little alternative to adopting them. There is no state in the 195 currently existing
countries in the TID sample that has not introduced at least some modern taxes.³

³ To be sure Palau and Nauru have only introduced one modern tax each (the PIT and the CIT
respectively).
      5

Given the diversity of national settings, the uniformity of tax instruments is quite
remarkable.
Analytically, the chapters show that essential correlates of sovereign tax intro-
duction are space-invariant: wars and economic recessions matter for tax intro-
ductions everywhere, and so does democracy; the effects of socio-economic
modernization and differentiation are weak and ambiguous everywhere. This is
not to say that there is no spatial variance at all. Yet, explanations that work in one
regional context tend to travel to other contexts reasonably well (e.g. Frizell,
Chapter 2, this volume). The Western path to tax modernity is not so special
after all. This finding was quite a surprise to us (Seelkopf et al. 2019).
More pronounced than spatial differences are differences across time and taxes.
Different taxes tend to have different correlates of introduction. For instance,
economic recessions tend to accelerate the adoption of INHs or SSC but slow
down the adoption of PITs or the VAT (Papadia and Truchlewski, Chapter 7, this
volume). Corporate tax introductions are more responsive to democracy (in terms
of the extent of the suffrage) than introductions of the PIT (Andersson, Chapter 8,
this volume). Also, similar correlates are often associated with the introduction of
different taxes at different points in time: democracy seems to have fuelled the
introduction of progressive income taxes at the beginning of the twentieth century
but the introduction of regressive general consumption taxes at century’s end
(Kato and Toyofuku, Chapter 6, this volume).
The most pronounced differences appear between sovereign and non-sovereign
tax introductions (Frankema and van Waijenburg, Chapter 3; Schlichte,
Chapter 4, this volume). Colonial introductions follow their own logic. They
reflect not only the colony’s wars, socio-economic conditions or political institu-
tions but also, and often primarily, those of the colonial metropole. Also the legacy
of empire (including the Austro-Hungarian and the Russian empires in the early
twentieth century or the Soviet Union and Yugoslavia in the late twentieth
century) shapes the path to modern taxation in important ways (Todor,
Chapter 5, this volume).

1.3 Modern Taxation

What are taxes? What are modern taxes? And how is the introduction of modern
taxes connected to state formation? We clarify these questions and give a very
short overview of the Tax Introduction Dataset (TID), which forms the empirical
basis for the chapters of this volume.
Taxes are payments to the state ‘in exchange for nothing in particular’ (Martin
et al. 2009, 3). They are compulsory and unrequited: taxpayers are legally obliged
to pay taxes and cannot expect any specific benefit in return such as a piece of
public property or a particular health care treatment in a public hospital. Taxes are
6     

not fees. They are collected to pay for state-provided public goods. Yet, the liability
of the individual taxpayer is independent of the utility, if any, he or she derives
from these goods.
While taxation is an old instrument of rule, its rise to fiscal pre-eminence is
fairly new. Even in Western Europe, usually regarded as the cradle of modern
taxation, non-tax sources of revenue played a prominent role until the First World
War (Neumark1948). Medieval European monarchies relied primarily on the
king’s own assets and funds for revenue (Schumpeter 1976). Foreign conquest
and plunder helped sustain the French state during the Napoleonic wars of the late
eighteenth and early nineteenth century (Bordo and White 1991, 315). The
privatization of public lands and the nationalization of church property fuelled
public revenues in the Americas during the nineteenth century (Zuluaga 2021).
Great Britain derived roughly a fifth of its revenue from the operation of mail,
telegraph, and telephone services in the late nineteenth century. The Vodka
monopoly generated about the same revenue share in Russia in the early twentieth
century (Ferguson 2001, 55).
The prominence of non-tax revenues reflected tight structural constraints
on taxation. Low levels of economic development limited the taxable surplus
of the European economy up to and into the nineteenth century, and in some
developing countries until today: people living close to subsistence level simply
do not have much that can be taxed away (Hinrichs 1966, 8; Webber and
Wildavsky 1986, 333). Deeply entrenched social privilege protected the rich
(the Church, the nobility) from (direct) taxation (Kiser and Karceski 2017,
79). Low rates of marketization and monetization forced emerging states to
tax income in kind, for instance through forced labour or the tithe (e.g. Maier
2014, 57).
The industrial revolution and the spread of capitalism relaxed some of these
constraints in nineteenth-century Europe. Still, tax revenues remained con-
strained by the specificity of tax instruments: trade taxes and tolls fell narrowly
on easy to monitor bottlenecks of economic activity (ports, bridges, roads, canals);
excises burdened salient items of daily consumption (salt, beer, matches); taxes on
huts, heads, windows, chimneys, land and other conspicuous features of property
fell unevenly on citizens’ wealth and income; excises were charged per unit (rather
than per market value—ad valorem), their revenues fell with inflation unless rates
were raised by extra legislation. In sum, ‘premodern’ taxes were blunt, narrow-
based, per unit instruments, and not very buoyant (Kiser and Karceski 2017, 77;
Hinrichs 1966).
Taxation’s rise to fiscal dominance was closely related to the emergence of a
small set of new taxes from the late eighteenth century onwards: INH, PIT, CIT,
SSC, and general consumption taxes of either a GST or VAT type. These ‘modern’
taxes differed from ‘premodern’ taxes in two principal ways: they were broad-
based and they apply ad valorem.
      7

Broad-based: modern taxes tap into macroeconomic tax bases comprehen-

sively: PITs and CITs apply to income from virtually all sources; SSC falls on all
forms of wage income;⁴ INH captures wealth of potentially all types; GSTs and
VAT apply to all sales transactions unless specifically exempted. A broad macro-
economic base usually implies a broad social base. Modern taxes tend to draw
persons and activities into the tax net that partially or completely escaped pre-
modern forms of taxation.
Ad valorem: modern taxes apply not per-unit but per market value: income
taxes apply to the directly assessed net income of the individual or corporate
taxpayer rather than to some income proxy like class, occupation, or size of the
house, hut or plot of land; the INH applies to assessed wealth rather than
presumed wealth; VAT and GSTs are charged on the price rather than the
quantity of purchases.
The advent of modern taxes marks a critical juncture in fiscal development
because it greatly increased the revenue capacity and the redistributive potential of
the tax system.
Revenue capacity: since they are broad based, modern taxes can raise more
revenue with less economic distortion. Since they are ad valorem, their revenue
increases elastically with nominal growth and fluctuates automatically with the
business cycle. There is no need for specific tax rate adjustments or other legal
changes (Peters 1991, 52). Premodern taxes are less buoyant because they have
narrower bases that draw only selected incomes, assets, or purchases into the tax
net. Also, to the extent that they are charged per unit they do not adapt automat-
ically to business fluctuations and decay with inflation. The revenue capacity of
modern taxation facilitated a secular increase in public revenues. Even least
developed countries often have higher revenue ratios today than the most devel-
oped Western states used to have before the First World War. It also led to a
partial displacement of other revenue sources. As Figure 1.1indicates, 70 per cent
of current global tax revenues are raised, on average, by five taxes of the TID
sample: personal and corporate income taxes (PIT and CIT), SSC, and general
consumption taxes (VAT or GST).⁵
Redistributive potential: modern taxes extend the redistributive policy options
of the government. First, most obviously, their revenue capacity allows for more

⁴ Sometimes, SSC are charged on other forms of income as well. For instance, the SSC system
adopted in Chile in 1924 included mandatory contribution for self-employed persons with a weekly
turnover of up to five thousand pesos (Chile 1924, 1–11).
⁵ The INH (not shown in Figure 1.1) is no longer an important revenue source. In the average
OECD country, it raised only about 0.4 per cent of total tax revenue in the early 2010s (Seelkopf et al.
2019, Table 2). Yet, the tax was an important revenue source during the take-off phase of the modern
state in the late nineteenth and early twentieth century. British inheritance tax, for instance, raised
around 12 per cent of total revenue in 1900 (Flora 1983, 333), i.e. about the share CIT raises, on global
average, today. In the United States, INH still generated almost 6 per cent of total federal receipts in
1935 (Thorndike 2009, 31).
8     

80

Percent of Total Tax Revenue

60

40

20

0
CIT PIT SSC
GST/VAT All Four

Figure 1.1 Revenue of modern taxes as percent of total tax revenue, average of up to
155 countries, 2010–2014
Source: IMF (2014).

redistributive spending. Second, modern taxes enable governments to improve the

‘market neutrality’ and horizontal fairness of the tax system (Swank and Steinmo
2002). Because they are broad-based they facilitate drawing all relevant classes,
sectors, and activities into the tax net. The narrow base of premodern taxes
precludes such inclusiveness: land taxes capture income from land but not from
industry; salt taxes fall on the poor more than on the rich; trade taxes exempt non-
traded sectors, etc. Horizontal fairness remains elusive. Finally, modern taxes offer
various options to differentiate the tax burden vertically between classes, sectors,
and activities, for instance by progressive PIT rates, through targeted CIT exemp-
tions, through special deductions for children or pensioners, or through special
rates of VAT for selected goods and services (e.g. Peters 1991). By contrast, the
potential of premodern taxes for vertical redistribution remains structurally con-
strained by their narrow bases.
Two caveats before we move on. First, not all modern taxes are alike. Some have
higher revenue capacity than others as Figure 1.1indicates, and this capacity may
vary over time. Some have more redistributive potential than others. Arguably,
CIT is more progressive than PIT which in turn is more progressive than SSC or
VAT (see Andersson, Chapter 8; Kemmerling, Chapter 10, this volume). Both
differences are related to differences in the social base of modern taxes. General
consumption taxes are potentially the most socially inclusive because they cover
not only the formal sector but also some input purchases by the informal sector.
The social base of the PIT, by contrast, is limited to income earners in the formal
economy. It doesn’t reach into the informal sector at all. Other taxes are even
more exclusive. SSC usually cover only wage income in the formal sector. CITs
      9

only affect companies and, indirectly, their individual owners. This is also the
group potentially most affected by the INH.
Second, not all ‘modern’ taxes are necessarily modern in a strictly temporal
sense. In fact, some taxes in the TID sample have very old ancestry. Venice, for
instance, already operated a PIT, the tansa, in the fourteenth century. France
experimented with a progressive income tax around the turn to the eighteenth
century but quickly ran into sustained opposition from the propertied classes
(Ames and Rapp 1977). A fairly broad-based general consumption tax, the
alcabala, applied in early modern Spain and its American colonies (Grafe and
Irigoin 2006). The taxation of inheritance and bequests goes back at least to
Roman times (West 1908). Yet, the fiscal success of these early embodiments of
modern taxation was limited. Often they generated more problems than revenues.
They were unstable and did not spread across jurisdictions. Their time simply had
not come. It only came in the nineteenth and twentieth century but then with a
vengeance, as we will discuss below. In this sense, they are modern taxes.
The key event in states’ transition to modern taxation is the formal adoption of
a new, modern tax (or set of taxes). The introduction of a new tax is likely to be ‘a
quite public event, accompanied by a high degree of negotiation from a wide range
of potential tax payers’ (Levi 1989, 49). It heralds a fiscal empowerment of the
state. It extends tax obligations to new social groups and activities, and offers new
opportunities to the government to shift the tax burden between classes, sectors,
regions, or over time. In short, it implies a fundamental change of the fiscal
contract. The stakes are high. The consequences are large and potentially long-
lasting. Political mobilization is strong among both, proponents and opponents,
presumed winners and presumed losers. In short, the introduction is likely to
bring the conflicts and conditions of tax modernization into sharp relief. This
makes tax introductions ‘symptomatically’ (Schumpeter 1976 [1918], 331)
important. They reveal dominant cleavages in distributive politics.
Tax introductions are also ‘causally’ (Schumpeter 1976 [1918], 331) important
for fiscal development because they increase the revenue capacity and redistribu-
tive potential of the state. Various studies as well as some chapters in this volume
show a positive impact of tax introductions on revenue in general (e.g. Aidt and
Jensen 2009a; Mares and Queralt 2015; Keen and Lockwood 2010; Scheve and
Stasavage 2016; Seelkopf et al. 2016; Andersson, Chapter 8, this volume;
Ganderson and Limberg, Chapter 9, this volume). In specific cases, to be sure,
governments may fail to enforce newly introduced taxes, thus effectively leaving
fiscal realities unchanged. Even then, the adoption changes the normative frame in
which these realities are negotiated. A new tax creates the normative expectation
of enforcement. This tilts the political battlefield in favour of actors with an
interest in the actual use of a new tax, and reduces the political costs for the
government of hiking up enforcement activity when administratively possible or
fiscally convenient. In this way, even the introduction of a pro-forma tax
10     

contributes to the fiscal capacity of the state. In the absence of better data,
information about tax introductions can serve as a rough proxy of fiscal capacity
building.
All chapters in this volume draw the measures of their dependent variable—tax
introductions—from the first truly global Tax Introduction Dataset (TID) (avail-
able at tid.seelkopf.eu). The technical details of TID have been explained elsewhere
(Seelkopf et al. 2019; Genschel and Seelkopf 2019). Suffice it to note that TID
codes the year and the mode of the first permanent introduction at the national
level of six major modern taxes: PIT, CIT, INH, SSC, GST, and VAT. The TID
focuses on tax introductions at the national level because the central government
typically dominates domestic taxation, and also in order to ensure data compar-
ability across countries. It only records permanent introductions because perman-
ent taxes are more likely to have an enduring effect on fiscal capacity formation
than temporary revenue instruments. Temporary taxes and special taxes for war
finance are not covered. TID distinguishes three modes of tax introduction:
sovereign (when an independent state introduces a tax), colonial (when a tax is
introduced under colonial rule and retained after independence) and inherited
(when a tax is introduced by a state and retained by a breakaway state after
secession from the former state).
While the TID is more comprehensive than previous tax introduction datasets
in terms of countries, taxes, and time periods covered (Seelkopf et al. 2019,
Table 1), some obvious limitations remain. They include the neglect of temporary
or subnational tax introductions as well as the lack of information on tax aboli-
tions and re-introductions. These limits are real but mitigated by qualitative
comments linked to each data entry. The comments provide background infor-
mation to the particular tax introduction event including on temporary introduc-
tions prior to, or abolitions and re-introductions after, that event. Also
subnational introductions are often recorded, if unfortunately, not comprehen-
sively and consistently.
TID’s comprehensiveness is an asset for quantitative research but also raises
validity concerns. Is the PIT introduced in the colonial Dutch East Indies (present
day Indonesia) in 1839 really the same fiscal instrument as the PIT introduced by
its colonial master, the Netherlands, in 1893 or by the post-communist Czech
Republic in 1992? Differences between these taxes are easy to find, and historians
are apt to point them out.⁶ Still, all three taxes share important attributes, which
make it theoretically meaningful to treat them as essentially similar: they all
constitute compulsory levies on the directly assessed net income of individuals.
The TID codebook (Genschel and Seelkopf 2019) carefully explains the coding
criteria used to ensure data consistency across time, space, and taxes. It also

⁶ See e.g. Frankema and van Waijenburg’s comparison of the Dutch and Dutch East Indies personal
income tax (Chapter 3, this volume).
      11

discusses borderline cases and trade-offs to flag potential validity issues. Finally,
the codebook explains data sources and research methodology.⁷

1.4 The Global Transition to Modern Taxation

Based on TID data, we map the spread of modern taxation over time, across
countries, across tax types, and across modes of tax introduction (sovereign,
colonial, and inherited). The aim is to describe general patterns in our dependent
variable: the adoption of modern taxes. We conclude with an assessment of the
status quo: how many countries have introduced modern taxes in the past and still
levy them today?

1.4.1 Modern Tax Introductions over Time

How did the transition to modern taxation unfold over time? Figure 1.2 charts the
number of modern taxes that were introduced globally in any particular year
between 1750 and 2018. It indicates two distinct stages of diffusion.
The first stage lasted from the late eighteenth to the early twentieth century. It
was marked by low levels of infrequent introductions. In many years, not a single
country adopted a single modern tax. While the pace of introductions accelerates

50

40

30
# Countries

20

10

0
1750 1800 1850 1900 1950 2000

Figure 1.2 Modern tax introductions over time

Source: TID v.2019 (Seelkopf et al. 2019; Genschel and Seelkopf 2019).

⁷ The codebook can be downloaded at http://tid.seelkopf.eu/.

12     

towards the end of the nineteenth century, overall numbers remained low until the
First World War. The second period began in the 1920s and lasted until the 2000s.
It was characterized by a high, and highly fluctuating, frequency of tax introduc-
tions. Modern taxes were adopted every year, and sometimes in very high num-
bers. Some spikes in tax introductions appear to be associated with the dissolution
of empires. Thus, the disintegration of the Russian and the Austro-Hungarian
empires after the First World War brought a spurt of tax introductions in its wake,
as newly independent successor states in Eastern Europe adopted several modern
taxes more or less at the same time in the 1920s. The breakup of the Soviet Union
and Yugoslavia gave an even larger boost to tax introductions in the 1990s. Other
bursts in introduction activity are associated with colonial rule. For instance, new
French labour legislation led to the simultaneous introduction of SSC in 14 French
colonies in 1952.
In conclusion, Figure 1.2 shows a high ‘compression in time’ (Maier 2014, 80)
of modern tax introductions. After a long gestation period beginning in the late
eighteenth century, the bulk of introductions happened in roughly 80 years
between the 1920s and 2000s. The world moved towards modern taxation more
or less as one.

1.4.2 Modern Tax Introductions across Space

How did the transition to modern taxation develop across space? As a first cut,
Figure 1.3 indicates the time period in which a particular country introduced its
first modern tax ever (irrespective of tax type). As it shows, only a quarter of
countries worldwide had adopted at least one TID tax by 1888. This group of early
adopters includes the usual suspects from Western Europe (France, Germany,
Italy, Spain, the Scandinavian countries, and the United Kingdom). Yet it also
includes Russia, Japan, most of Latin America, and some Asian colonies including
British India (current day Bangladesh, India, Pakistan) and the Dutch East Indies
(Indonesia). Here the colonial government introduced a PIT on non-agricultural
income already in 1839, more than 50 years before the Netherlands introduced a
PIT at home (in 1893), and about three years before the United Kingdom
introduced the first permanent PIT in Western Europe (see Frankema and van
Waijenburg, Chapter 3, this volume). Finally, note that some countries are con-
spicuous by their absence from the group of early adopters, most notably the
United States.
While the early adopters had taken almost one and a half centuries to introduce
the first modern tax (1759–1888), the subsequent quarter of countries took only
roughly forty years (1889–1927). This second group includes the United States,
British dominions (Australia, Canada, South Africa) as well as substantial parts of
colonial Africa and Asia. The third quarter was even faster (1928–1948). This
Figure 1.3 The timing of the first modern tax introduction
Source: TID v.2019 (Seelkopf et al. 2019; Genschel and Seelkopf 2019).
 14     

group consists of pre-revolutionary China, as well as many colonies in Africa,

Asia, and the Middle East. The final quarter of latecomers, which introduced their
first modern tax after 1948, comprises mostly countries that gained independence
after the breakdown of the Soviet Union and Yugoslavia in the 1990s.
In sum, the transition to modern taxation was characterized by a broad
‘extension across space’ (Maier 2014, 80). It did not start in a Western core of
countries and then diffuse to the rest of world, as the Eurocentric bias of much of
the literature may imply (Seligman 1911; Webber and Wildavsky1986; Peters
1991; Aidt and Jensen 2009b; Mares and Queralt2015). It was global right from
the beginning. The frontrunners of the nineteenth century comprised Western
and non-Western countries including some colonies. Also the introduction waves
in the twentieth century were not usually limited to particular continents or
regions.

1.4.3 Modern Tax Introductions across Tax Types

How did the global transition to modern taxation unfold across different taxes? As
Figure 1.4 shows, different taxes began to spread at different points in historical
time: the INH during the first half of the nineteenth century; PIT during the

Inheritance Tax (Austria) Social Security Contributions (Baden)

20 20
# Countries

# Countries

15 15
10 10
5 5
0 0
1750 1800 1850 1900 1950 2000 1750 1800 1850 1900 1950 2000

Personal Income Tax (Hanover) Corporate Income Tax (Bolivia)

20 20
# Countries

# Countries

15 15
10 10
5 5
0 0
1750 1800 1850 1900 1950 2000 1750 1800 1850 1900 1950 2000

General Sales Tax (Philippines) Value Added Tax (Brazil)

20 20
# Countries

# Countries

15 15
10 10
5 5
0 0
1750 1800 1850 1900 1950 2000 1750 1800 1850 1900 1950 2000

Figure 1.4 Modern tax introductions over time, by tax type (first introducer)
Source: TID v.2019 (Seelkopf et al. 2019; Genschel and Seelkopf 2019).
      15

second half of the nineteenth century; SSC and CITs followed at the turn to the
twentieth century; GSTs spread after the First World War, and VAT from the late
1960s.
Interestingly, there often was a considerable time gap between the first adoption
of a tax and its broad diffusion. For instance, the German principality of Baden
introduced SSC for its civil servants in 1758 with no other country following suit
for almost 50 years. Austria introduced INH in 1759 to pay off its debt from the
Seven Years War. It took more than thirty years for Denmark and Spain to also
adopt INHs in 1792. The Philippines pioneered a GST in 1904 under the colonial
rule of the United States. Nothing happened until European countries started to
also adopt sales taxes during the First World War. While Bolivia established a CIT
as early as 1873, the broad diffusion of the tax started only in the 1910s. VAT is an
exception to the rule: its first introduction in Brazil in 1966 was immediately
followed by similar introductions in the member states of the then European
Communities.⁸
As Figure1.4 also shows, taxes tend to spread in waves. This is most pro-
nounced with respect to VAT introductions (strong wave 1980–2010) as well as
to introductions of the PIT (main wave 1920–1950). It is less pronounced but still
visible with respect to GSTs (introductions clustering in the 1920s, 1960s, and
1970s), the CIT (clustering around the 1950s), and SSCs (clustering 1950–1970).
In marked contrast, INH adoptions are spread out fairly evenly over the entire
period of observation. To be sure, in the 1820s, newly independent Colombia,
Ecuador, Venezuela, and Panama all adopted the INH almost simultaneously in
order to make up for the revenue shortfall associated with the end of Spanish
colonial subsidies. Overall, however, the temporal concentration of introductions
is much weaker than for other taxes.
Finally, Figure 1.4 shows sudden spikes in introduction activity (see also
Figure 1.2). Interestingly, these spikes often coincide with the highpoints of
introduction waves. This may suggest that if a shock event hits (e.g. a war, the
dissolution of empire, a democratic revolution), this tends to privilege the intro-
duction of taxes, which are particularly popular at that specific historical moment.
We come back to this point below.
In conclusion, different taxes had different historical times. They entered the
global stage at different points (INH first, VAT last, the others in between). They

⁸ There is some debate as to when the first VAT was introduced. The intellectual origins of the VAT
lie in the early 1920s with Carl Friedrich von Siemens (1920) in Germany and Thomas S. Adams (1921)
in the United States (see also Brederode 2009, 7). France is often claimed to have been the first adopter
in 1954. Yet, the sales tax it introduced that year granted refunds for tax paid on inputs only for the
manufacturing stage. It was not before 1968 that France introduced a fully fledge VAT granting tax
refunds at all stages of the production and distribution chain. This is why TID treats 1968 as the year of
French first VAT introduction (Genschel and Seelkopf 2019, 7).
16     

reached the peak of their popularity at different times. And they diffused at
different speeds (VAT fastest, INH slowest).

1.4.4 Modern Tax Introductions by Mode

How prevalent are non-sovereign introductions? Most of the fiscal literature

focuses on the tax policy of sovereign states. Yet, modern taxes were often
imposed by colonial rulers or imperial governments. For instance, the PIT was
introduced in India under the British Raj in 1886 and was then retained after
independence in 1947 by both India and Pakistan (colonial introduction). Also,
most post-Soviet states kept the contribution-based social security system that had
been adopted by the Soviet Union in 1990 shortly before its dissolution in 1991
(inherited introduction).
As Figure 1.5 shows, non-sovereign introductions are common in direct tax-
ation but fairly uncommon in indirect taxation. Seventy-two countries inherited
their PIT from their former colonial master. Colonial introductions of CITs, SSC,
and INHs are less frequent but still sizeable. By contrast, colonial introductions of
general consumption taxes are rare. In no case was the VAT introduced during
colonial times, presumably because the tax only emerged after the large wave of

PIT SSC CIT

sovereign sovereign sovereign

colonial colonial colonial

inherited inherited inherited

0 50 100 150 200 0 50 100 150 200 0 50 100 150 200

INH GST VAT

sovereign sovereign sovereign

colonial colonial colonial

inherited inherited inherited

0 50 100 150 200 0 50 100 150 200 0 50 100 150 200

Figure 1.5 Modes of tax introductions

Source: TID v.2019 (Seelkopf et al. 2019; Genschel and Seelkopf 2019).
      17

decolonization in the 1950s and 1960s. Inherited introductions are most common
in SSC.
The prevalence of non-sovereign tax introduction suggests that the link
between state formation and fiscal capacity building is less straightforward than
often assumed. While much of the literature takes for granted that the state comes
first and then develops its own fiscal infrastructure, in colonial settings it is often
the other way around: the colonial ruler creates an infrastructure of modern taxes,
which post-colonial governments then try to appropriate for their own purposes.
The continuity in tax instruments is remarkable given the deep political ruptures
often associated with the end of empire.
In conclusion, non-sovereign tax introductions are common. A large share of
contemporary income taxes has colonial origins.

1.4.5 Modern Taxation Today

How far have modern taxes diffused today? Figure 1.6 plots the status quo in the
195 currently existing countries of the TID sample. As it shows, direct taxes apply
almost universally. PIT, CIT, and SSC have been introduced by virtually all
countries in the past, and they are still in place virtually everywhere. Very few
countries never introduced these taxes, and even fewer introduced them only to
abolish them again. VAT introductions are slightly less prevalent but extremely

195

150
Number of Countries

100

50

0
SSC CIT PIT VAT GST INH
Total Introductions Still in Place
For 195 countries existing today

Figure 1.6 The spread of modern taxes

Source: TID v.2019 (Seelkopf et al. 2019; Genschel and Seelkopf 2019).
18     

sticky: Iran is the only country that has ever introduced VAT in the past but does
not have VAT today.⁹
The picture is different for GST and INH. These taxes have been adopted less
frequently than the other taxes, and have also been less likely to endure. Of the 129
countries having introduced INH in the past, more than 40 per cent had abolished
it by 2017. Of the 144 countries having adopted GST, more than 90 per cent no
longer operate it today. Obviously, both taxes are in decline. Yet, the decline of
GST is associated with the rise of VAT, i.e. a new, more sophisticated tax on the
same tax base (Ganderson and Limberg, Chapter 9, this volume). In fact, if we add
the number of GSTs currently in force to the number of current VATs, the
prevalence of general consumption taxes is at about the level of PIT. INH, by
contrast, is abandoned with no new wealth tax emerging in lieu. Given vocal
concerns about rising wealth inequality and calls for more wealth taxation (e.g.
Saez and Zucman 2019), the uncompensated erosion of the INH is remarkable.
In conclusion, modern taxation is a fiscal universal. Almost all countries
worldwide have introduced almost all modern taxes in the TID sample. PIT,
CIT, SSC, general consumptions taxes usually of the VAT-type and, to a lesser
extent, INH are truly global taxes. Non-introductions are mostly limited to oil-
producing states such as the United Arab Emirates¹⁰ and Kuwait,¹¹ and to micro
states like Nauru¹² or Vanuatu.¹³ They are generally rare.¹⁴

1.5 Global Explanations?

There is no shortage of theories explaining when and why governments engage in

fiscal innovation including the introduction of new taxes. How well do they travel
across space, time, tax type, and mode of introduction? We provide thumbnail
sketches of four prominent theories and then review key findings of the chapters.

⁹ In only five countries, has an existing VAT ever been removed: Grenada (introduced 1986,
dismantled shortly thereafter), Ghana (introduced March 1995, removed two months later), Malta
(introduced 1995, removed 1997), Belize (introduced 1996, removed 1999), and Iran (introduced 2008,
abolished 2017). In four of these cases, the VAT has been reintroduced later: Ghana (reintroduced in
1998), Malta (1999), Belize (2006), and Grenada (2010) (International Tax Dialogue 2013, 17; Financial
Tribune 2017). Iran is the only country that hasn’t reintroduced the VAT (yet).
¹⁰ The United Arab Emirates never introduced PIT, CIT, SSC, INH, or GST.
¹¹ Kuwait never introduced PIT, INH, GST, and VAT.
¹² Nauru never introduced PIT, SSC, INH, GST, and VAT.
¹³ Vanuatu never introduced PIT, CIT, or INH.
¹⁴ Only nine currently existing countries in the TID sample have introduced three or fewer modern
taxes. Eight of these countries have a population of fewer than five million people. Six are oil producers:
Bahrain (pop. 1.5 million, oil), Bosnia and Herzegovina (pop. 3.4 million, no oil), Brunei Darussalam
(pop. 0.4 million, oil), Kuwait (pop. 4.7 million, oil), Nauru (pop. 0.013 million; no oil, but phosphate),
Oman (pop. 4.3 million, oil), Qatar (pop. 2.8 million, oil), United Arab Emirates (pop. 10.7 million, oil),
Vanuatu (pop. 0.3 million, no oil).
      19

1.5.1 Four Drivers of Tax Modernization

The chapters focus on four main explanations of tax modernization: war, eco-
nomic recession, socio-economic modernization, and democracy. Obviously,
other factors potentially matter as well including technology, ideology, diffusion,
and international organizations. Arguably however, fiscal shocks (war and reces-
sion), modernization, and democracy are most popular in the literature. We
therefore focus on them to assess regional, temporal, substantive, and modal
variation in tax introductions. We start by reviewing each of the theories in turn.
Take wars first. Much of the classic literature on European state building
considers war as the main driver of fiscal innovation (Spencer 1898; Tilly 1990;
Hintze 1970). Wars are expensive thus creating demand for extra revenue capacity
(Peters 1991, 232; Dincecco and Prado 2012; Gennaioli and Voth 2015; Kiser and
Linton 2001; Zielinski 2016; Obinger et al. 2018). Wars also often create material
inequities that fuel demands for fiscal redistribution. At the same time, wars
facilitate the supply of more revenue and redistribution. They promote a ‘rally
’round the flag effect’ that mitigates popular resistance to new and higher taxes
(Feldman and Slemrod 2009; Levi 1989). Real or perceived ‘war profits’ erode the
political power of capital to resist higher taxes on the rich. All these effects
combined explain why wars are usually associated with new, more revenue-
efficient, and progressive taxes, such as PIT or INH (e.g. Scheve and Stasavage
2016).
Economic recessions can likewise shock governments into tax policy innov-
ation. As Andrea Papadia and Zbigniew Truchlewski explain (Chapter 7, this
volume), recessions often increase the demand for revenue by simultaneously
decreasing tax receipts, increasing spending requirements (on unemployment
insurance and other crisis-management activities), and restricting access to capital
markets or bank lending. Recessions facilitate the supply of new revenue by
undermining the legitimacy of the status quo and by facilitating the emergence
of new reform coalitions. Blame attribution to capital and industry reduces the
obstacles to new ‘soaking the rich’ taxes but makes the introduction of new mass
taxes more difficult or, at the very least, contingent on promises of future fiscal
benefits to the (victimized) masses, as embodied most visibly in SSC (see also
Limberg 2020).
Consider socio-economic modernization next. There are various reasons to
expect economic and social progress to be associated with tax modernization
(Hinrichs 1966; Wagner 1883). Growth and development increase the demand for
revenue and redistribution. According to Wagner’s law, state expenditure¹⁵

¹⁵ As Peacock and Scott (2000, 3) emphasize, Wagner’s law is about ‘state activity’ and not ‘state
expenditure’. However, since an increase in activity usually brings an increase in expenditure in its
wake, later interpretations of the ‘law’ have focused on expenditure.
20     

increases with economic wealth (e.g. Kiser and Karceski 2017; Wagner and Weber
1977; Peacock and Scott 2000). States must spend more because the increasing
wealth of the population facilitates political mobilization for the provision of more
public goods, services, and redistribution (Hinrichs 1966, 8), because Baumol’s
disease increases the relative costs of government services (Baumol 1993),¹⁶ and
because the increasing functional and spatial differentiation of society brings new
social risks in its wake that require collective insurance: urbanization, industrial-
ization, the erosion of traditional family ties (Flora and Heidenheimer 1981;
Montanari 2001).
Socio-economic modernization also facilitates the supply of new and higher
taxes. First, rich societies have a larger taxable surplus. They provide more income
streams, wealth, and consumption activities that can be taxed without cutting into
the basic needs of the population (Hinrichs 1966, 8; Webber and Wildavsky 1986,
333). Second, rich societies facilitate tax collection. Their state apparatus is usually
better staffed and better endowed, and hence more capable to administer complex
taxes. Economic transactions are highly monetized, marketized, and urbanized.
Economic agents are literate. This reduces tax compliance costs for taxpayers and
tax administrations alike (Besley and Persson 2013, 78–79; Dincecco and Katz
2016). Third, rich societies are highly differentiated functionally. This creates new
cross-cutting cleavages, for instance between land owning, commercial, and
industrial elites, that facilitate coalition building for new taxation.
Finally, consider the fiscal effects of democracy. According to redistributive
theories of democracy, the extension of the franchise to lower classes fuels the
political demand for more—and more redistributive—taxation (Meltzer and
Richard 1981). This, in turn, induces democratic governments to introduce
revenue-efficient and progressive taxes such as, most prominently, the PIT
(Peters 1991, 231; McCarty and Pontusson 2011; Aidt and Jensen 2009b). Yet, it
may also induce autocratic rulers to adopt progressive taxes so as to pre-empt
democratization in the first place (Acemoglu and Robinson 2000, 2001; see also
Boix 2003; Borge and Rattsø 2004; Gouveia and Masia 1998; Mares and Queralt
2015).
Fiscal contract theory, by contrast, claims that democracy facilitates the supply
of buoyant taxes (Besley and Persson 2009; Andersson, Chapter 8, this volume).
Democratic controls constrain the discretion of the government and reduce the
risk that it will abuse revenue for private purposes and socially wasteful spending.
This, in turn, increases taxpayers’ ‘quasi-voluntary compliance’ (Levi 1989,
52–53). The government’s enforcement costs decline (see also North and

¹⁶ In a nutshell, the cost diseases argument goes like this: government is labour-intensive; labour-
intensive industries tend to have lower productivity gains than more capital-intensive businesses; as a
consequence, the government has to spend more on the provision of labour-intensive public services in
order to keep the ratio of these services constant with the rising output of income and wealth by the
more capital-intensive private sector.
      21

Weingast 1989; Bates and Lien 1985). The state’s capacity to handle complex taxes
improves. The adoption of new taxes becomes easier.

1.5.2 Empirical Strategy

The chapters of this volume explore the extent to which fiscal shocks, socio-
economic modernization, and democracy are associated with tax introductions
across space, time, tax, and mode of introduction. Table 1.1 provides an overview
of the methods, measurements, and research designs used. We highlight five
important features.
First, all chapters have the same dependent variable, tax introductions, and rely
on the same data source to measure it, the TID data base. Yet, the chapters differ
in the mode of tax introduction they focus on (sovereign vs colonial) as well as in
the range of taxes they include in the analysis (all vs a subset of TID taxes).
Second, the chapters combine qualitative and quantitative approaches to
explain tax introductions: some engage in case study analysis, others rely on
regression analysis, yet others combine both approaches.
Third, the chapters focus on the same set of independent variables (war,
recessions, modernization, regime type) but do not always use the same measures
to operationalize them: some proxy economic modernization by a measure of
urbanization, others by GDP per capita; some use Polity IV to score regime type
(Marshall et al. 2016), others rely on the data by Boix et al. (2012), or Varieties of
Democracy (V-dem) (Coppedge et al. 2018; Pemstein et al. 2018).
Fourth, the chapters work with different country samples. The quantitative
chapters often analyse tax introductions worldwide. The qualitative case studies,
by contrast, remain limited to individual countries or regions.
Finally, the quantitative chapters use different estimation techniques to model
the likelihood of specific tax introductions over time (straightforward survival
models such as Cox regressions vs logit/probit estimators with time trends). Yet,
as the robustness checks suggests, this doesn’t affect the substantive findings.
The diversity of measures, methods and research designs allows for a richer and
more robust picture of the correlates of tax introduction than a more homogenous
approach could provide. This picture reveals important (non-)variation across
space, time, tax, and mode of tax introduction.

1.5.3 Variance across Space

Perhaps surprisingly, the chapters do not report much variance across world
regions: democracy and fiscal shocks (war or economic recession) seem to fuel
sovereign tax introductions virtually everywhere with little or no regional
Table 1.1 An overview of measures, methods, and research designs

Chapter Dependent Main independent/control variables Sample Method

variable (Subsample)
Modernization War Regime type Recession

2. War and Modern Sovereign tax Urbanisation Inter- and Democracy GDP growth World Logit
Taxation (Frizell) introductions(all (COW)b/ln intra-state dummy (Boix (Maddison)b (Latin regression
TID taxes pooled; GDPpc wars et al.)f America; with cubic
direct vs indirect (Maddison)c (COW)d,e Angola) polynomials;
taxes pooled)a mini case
study
3. Fiscal Development Colonial tax Qualitative Qualitative — Qualitative Africa and Historical
under Colonial and introductions (all Asia typology with
Sovereign Rule TID taxes)a descriptive
(Frankema and van statistics
Waijenburg)
4. Trajectories of Colonial tax Qualitative Qualitative Qualitative Qualitative Uganda and Comparative
Taxation in Uganda introductions (all Senegal case study
and Senegal TID taxes)a
(Schlichte)
5. The Historical Sovereign and Qualitative — Qualitative — Central and Case studies
Roots of Post- inherited tax Eastern with
Communist Taxation introductions (all Europe descriptive
(Todor) TID taxes)a statistics
6. Democratization Sovereign tax GDPpc Interstate war Mature/young — World Ordinary
and Tax Innovation introductions (PIT, (Maddison)c (COW)d democracy least-square
(Kato and Toyofuku) GST, VAT)a dummy; Polity regression
change
(Marshall
et al.)g
7. Recessions and Tax Sovereign tax — International Electoral GDP growth World Cox
Introductions introductions and domestic democracy (Maddison)c (Greece, proportional
(Papadia and (all TID taxes)a conflict index (V-Dem)i Chile, hazard
Truchlewski) (Brecke)h Sweden, UK) regression;
mini case
studies
8. Political Sovereign tax GDPpc Interstate war Suffrage and — World Penalized
Institutions and introductions (Maddison)c; (COW)d, civil legislative maximum
Income Taxes (CIT, PIT)a Urbanization war constraints likelihood
(Andersson) (Vanhanen)j (Przeworski)k (V-dem)i
9. The Rise of General Sovereign tax GDPpc Major Democracy Changes in World Probit
Consumption Taxes introductions (Gapminder)l interstate war dummy (Boix public debt (France, regression
(Ganderson and (GST, VAT)a dummy et al.)f (IMF)n Japan, with cubic
Limberg) (COW)m Chile) polynomials;
mini case
studies
10. SSC and the Fiscal Sovereign tax Urbanization Cumulative Polity (Marshall — World Logit
Origins of the Welfare introductions (Fink-Jensen)o civil and et al.)g (Germany) regression;
State (Kemmerling) (SSC)a (Reba et al.)p; interstate mini case
GPDpc wars (COW)q study
(Maddison)c
a
TID v.2019 (Seelkopf et al. 2019; Genschel and Seelkopf 2019); b COW’s National Military Capabilities dataset v.5 (Singer 1987); c Maddison Project database v.2018 (Bolt
et al. 2018); d COW’s Inter-State War dataset v.4. (Sarkees and Wayman 2010); e COW’s Intra-State War dataset v.4.1 (Sarkees and Wayman 2010); f Boix et al. v.3 (2012);
g
Polity IV (Marshall et al. 2016); h Brecke (2001); i V-Dem (Coppedge et al. 2018; Pemstein et al. 2018); j Vanhanen (2003); k Przeworski et al. (2013); l Gapminder (2017);
m
COW’s State System Membership list v.2016 (COW 2017); n IMF (2018); o Fink-Jensen (2015); p Reba et al. (2016); q COW’s data as extracted by Brecke and
Foldvari (2013)
24     

variation. The effect of socio-economic modernization is more ambiguous, again

with little evidence of regional variation.
Per Andersson (Chapter 8, this volume), and Junko Kato and Miki Toyofuku
(Chapter 6, this volume) find a positive relationship between democracy and
sovereign tax introductions for their global samples. It may not come as a surprise
that the first general strike in Europe (1893 in Belgium) led to the introduction of
universal male suffrage and SSC one year later. Yet, similar stories can also be told
about non-Western countries. Lebanon for instance introduced the PIT just one
year after it widened its suffrage to all men in 1944 (and five years later to all
women).
Likewise, Andrea Papadia and Zbigniew Truchlewski (Chapter 7, this volume)
suggest that severe recessions accelerate tax introductions across space. For
example, the long depression of the late nineteenth century was associated with
INH introductions in countries ‘as diverse as Sweden and Mexico, Russia and the
United Kingdom, Tunisia and Liechtenstein’.
As Jakob Frizell (Chapter 2, this volume) demonstrates, the incidence of a
major (interstate or civil) war increases the probability of sovereign tax introduc-
tions in all word regions but Latin America. This is in line with earlier research by
Miguel Centeno suggesting that war was not associated with fiscal innovation in
nineteenth-century Latin America (Centeno 1997, 2002). Yet, while Centeno used
his finding to challenge the universality of the ‘European paradigm’ of bellicist
state making (Centeno 1997, 1566), Frizell’s analysis suggests that Latin America
is the exception to the bellicist rule, not Europe. Even this exceptionalism is
limited. As Frizell also shows, very long-lasting wars increase the likelihood of
tax introductions also in Latin America.
Various chapters explore the link between socio-economic modernization and
tax introduction. The evidence is mixed in all world regions. Achim Kemmerling
(Chapter 10, this volume) finds a bell-shaped association of urbanization and
contribution-financed social security across various spatial contexts. Arpad
Todor’s analysis (Chapter 5, this volume) of Eastern Europe and Central Asia
suggests that tax introductions before communism broadly reflected differences in
economic development: the fairly advanced Austro-Hungarian Empire adopted
modern taxes early, the less developed Ottoman Empire relatively late, and the
Russian Empire at some point between the two. Yet, Todor finds no such
association after the end of communism in the 1990s: virtually all post-communist
countries (re-)introduced modern taxes more or less simultaneously despite
considerable differences in wealth. Also, as Ewout Frankema and Marlous van
Waijenburg show (Chapter 3, this volume), colonial Africa and Asia adopted
modern income taxes only slightly later, on average, than sovereign states in
Western Europe or North America even though they were considerably less
wealthy.
      25

In conclusion, the chapters suggest that bellicist, recessionist, modernist, and

democracy explanations travel fairly well across space. There is little evidence of a
distinct Western pathway (e.g. Seelkopf et al. 2019, Figure 4). If there is any
distinct pathway at all, it is a Latin American one.

1.5.4 Variance across Time

While war, recession, and democracy tend to accelerate tax introductions in

general, the acceleration effect varies over time in at least two ways. First, it affects
the introduction of different taxes at different points in historical time. Second, it
fades out towards the end of the period of observation.
Kato and Toyofuku provide an example of the first phenomenon (Chapter 6,
this volume). They show that democratization has stimulated the adoption of the
PIT during the nineteenth and early twentieth century (first and second wave of
democracy) but the adoption of the VAT during the late twentieth and early
twenty-first century (third wave of democracy). As they argue, democracy
increases the demand for public spending. Hence, the move towards democracy
tends to accelerate the introduction of the tax that is generally considered as the
‘most powerful’ (Kato and Toyofuku, Chapter 6) revenue instrument at the time.
This used to be the PIT in the past and is the VAT today. Kato and Toyofuku’s
finding may help to elucidate why the long-running controversy whether democ-
racy facilitates progressive taxation (Aidt and Jensen 2009b; Levi 1989) or not
(Mares and Queralt 2015; Scheve and Stasavage 2010; Cheibub 1998) has
remained inconclusive so far. A general, time-invariant answer may simply not
exist.
Papadia and Truchlewski (Chapter 7, this volume) make a similar argument for
economic recessions. As they show, recessionary episodes strongly stimulated the
introduction of the INH in the nineteenth century, but tended to fuel the adoption
of SSC more strongly during the twentieth century. Papadia and Truchlewski also
provide evidence for the second type of temporal variation. As they show, the
recessionist effect gradually weakens in recent decades: it is weaker for all taxes
after the year 2000 than before (Chapter 7, Figure 7.3). In a similar vein,
Ganderson and Limberg (Chapter 9, this volume) show that the link between
warfare and general consumption tax introductions has declined steadily from
strong and positive before 1950 to essentially zero after 1970. One possible
explanation for the fade out is selection. Early on, when a new tax is spreading,
all states are at risk of introducing it. As time passes by, more and more states leave
the risk pool by adopting the tax. The remaining states are likely to include an
increasing share of hard cases, i.e. countries in which even a war, a recession, or a
level of democracy that in other countries would easily trigger a tax adoption fail
26     

to do so. The TID data suggests that the hard cases are basically of two types:
resource exporters and micro-states (see section 1.4.5, note 14).
Resource rents slow down tax modernization by reducing the pressure to
develop new revenue streams. For instance, Chile’s nitrate boom provided the
government with sufficient export tax revenues to completely stall tax innovation
during the late nineteenth and early twentieth century (Ganderson and Limberg,
Chapter 9, this volume). The oil boom of the 1970s prevented the Gulf monarchies
from ever introducing a PIT and induced Saudi Arabia to abolish the income tax it
had introduced in 1950. Small country size delays tax modernization through dis-
economies of scale in tax administration. In countries like Nauru or Vanuatu, the
fixed costs associated with the introduction of a new tax (including the develop-
ment of new tax laws and procedures, and the creation of new administrative
capacities) fall on the shoulders of very few taxpayers. This tilts the cost-benefit
ratio against the introduction of new taxes. As a consequence, as the pool of states
at risk of tax introduction gradually shrinks to micro-states and resource produ-
cers, the likelihood of further tax introductions declines at every level of war,
recession or democracy.
In sum, the effect of wars, recessions, and democracy is time variant. It tends to
accelerate the adoption of different taxes during different historical periods. In
general, it facilitates the introduction of whatever tax is particularly salient and
popular at the time. The acceleration effect tends to weaken over time as adop-
tions converge to their natural ceiling.

1.5.5 Variance across Taxes

Various chapters show that the correlates of tax introductions vary across taxes.
Not all modern taxes follow the same logic. This is particularly true for some of the
taxes that are usually ignored in the literature: the CIT, SSC, and the GST.
Per Andersson (Chapter 8, this volume) compares the CIT and the PIT. While
the former falls narrowly on, presumably wealthy, companies and company
owners, the latter is often a mass tax that also falls on, presumably less wealthy,
wage earners. By and large, the CIT has more redistributive potential but the PIT
has higher revenue capacity. This has implications for the logic of introduction. As
Andersson argues, the introduction of the CIT will be more sensitive to electoral
democracy than the introduction of the PIT. This is because the lower strata of
society, which enjoy political representation only under democracy, have a strong
preference for the redistribution the corporate tax promises. Yet, even autocratic
elites may have a preference for the revenue capacity of the PIT. The case of the
United States illustrates his point: Congress adopted the CIT in 1909 (four years
prior to the PIT) as part of the Progressive Era’s attempt to curtail the economic
power of the rich (Mehrotra 2010, 531 cited in Andersson, Chapter 8, this
      27

volume). The statistical evidence is broadly supportive of Andersson’s argument.

While an extension of the suffrage is associated with an increased likelihood of
CIT introduction in all model specifications, the relation to PIT introductions is
less clear. In the full model, at least, there is no relation at all—in marked contrast
to classic theories of redistributive democracy that posit a positive effect (e.g.
Meltzer and Richard 1981) or new revisionist scholars, who expect a negative
association (e.g. Mares and Queralt 2015).
Achim Kemmerling (Chapter 10, this volume) compares the PIT to SSC. He
highlights two differences. First, in contrast to the PIT, SSC are levied on wage
income only. The exemption of capital income and land rents reduces redistribu-
tive potential and makes SSC politically palatable to conservative elites. Second,
SSC establish a notional link between contribution payment and social entitle-
ments: the payee is promised a defined benefit (pension payments, health care
services, unemployment assistance, etc.) in return for her contribution. In contrast
to the PIT, SSC drape as insurance premia rather than unrequited tax dues. Their
introduction is likely when the demand for insurance (i.e. for redistribution across
the individual life course rather than between individuals) is high. Papadia and
Truchlewski’s (Chapter 7, this volume) finding that economic recessions have
a particularly strong stimulating effect on SSC fits this argument nicely.
Kemmerling analyses how socio-economic modernization affects the demand
for social insurance. The demand for social insurance is generally low as long as
most people are employed in a largely informal and stationary rural economy. It
tends to increase as industrialization and marketization create new, vulnerable
groups such as skilled, urban workers. They are exposed to market risk and can’t
rely on traditional family or communal solidarity to cope with it. Their demand
tends to drive the introduction of SSC—but not in a straightforward way. As
Kemmerling shows, the likelihood that a country’s first social security programme
is contribution-financed (rather than tax-financed) is low both in very rural
societies (e.g. late-nineteenth-century Denmark) and in very urban societies (e.g.
small city states such as Singapore). In the former, there is too little demand for
insurance to make the construction of a contributory social security system
politically viable. In the latter, the demand is so broad as to make universal, tax-
financed social security politically attractive. Kemmerling finds the highest likeli-
hood of a contribution-financed social security programme at intermediate levels
of urbanization (e.g. nineteenth-century Germany). Here, urban groups are large
enough to make it politically imperative to cater to their demand for social
security but separate enough from the rest of society to merit the construction
of a contributory system targeted at their specific needs.
Next to PITs and SSC, general consumption taxes are a third major funding
source of the welfare state. As Joseph Ganderson and Julian Limberg (Chapter 9,
this volume) show, the existence of spending-intensive social programmes (old
age, sickness, unemployment) significantly increases the likelihood of the
28     

introduction of a general consumption tax. This finding resonates with the recent
emphasis in comparative political economy on the importance of regressive
consumption taxes for the welfare state (Wilensky 2002; Hays 2003; Kato 2003;
Ganghof 2006; Beramendi and Rueda 2007). Yet it shows that the link
between consumption taxation and social security is much older than most of
this literature assumes: it did not start with the VAT. In more than 75 per cent of
country cases, the first general consumption tax was a GST. The revenue effect
of the introduction of this tax was large and lasting. The revenue effect of its
replacement by the VAT was modest by comparison. Hence, scholars interested in
the link between consumption taxation and the welfare state do well to broaden
their focus beyond the VAT and also consider the role of its historical predecessor,
the GST.
In short, tax differences matter. The three levies that are usually ignored in the
literature, the CIT, SSC, and GSTs are sufficiently distinct from the PIT and the
VAT in terms of their revenue capacity or redistributive potential to merit greater
scholarly attention.

1.5.6 Variance across Modes of Introduction

Most of the literature and indeed most of the chapters in this volume focus on
sovereign tax introductions. Yet, in many countries modern taxes were introduced
under colonial rule. As the chapters by Ewout Frankema and Marlous van
Waijenburg (Chapter 3, this volume), and by Klaus Schlichte (Chapter 4, this
volume) show, this changes the logic of tax introduction substantially. War,
democracy, and socio-economic modernization (or lack thereof) also mattered
for colonial tax introductions but in very different ways than for sovereign
introductions.
Take war. The chapters highlight two differences. First, it was usually the inter-
state wars of the colonial metropole that drove modern colonial tax introductions,
not the colonies’ ‘own’ wars: India introduced a CIT in 1916 to contribute towards
the British Empire’s war effort during the First World War (Frankema and van
Waijenburg, Chapter 3, this volume); Senegal and Uganda introduced new CITs
and PITs during the Second World War (Schlichte, Chapter 4, this volume).
Second, the colonies ‘own’ wars were usually ‘pacification’ wars fought against
indigenous populations. These wars failed to trigger the ‘rally ‘round the flag’
effect suggested by bellicist arguments. If anything, they fuelled a ‘rally against the
(colonizer’s) flag’ because people generally dislike being taxed for their own
subjugation. Tax resistance among indigenous populations was high. Modern
income taxes were often introduced to draw relatively compliant colonial settlers
and foreign companies into the tax net so as to reduce the tax burden on more
recalcitrant ‘natives’.
      29

While there wasn’t any democracy in the colonies, the democratization of the
metropole mattered for colonial taxation. As Schlichte (Chapter 4, this volume)
explains, the integration of lower classes into the political system strengthened the
opposition to the use of public resources for colonial possessions that benefited
only a tiny upper crust of military, economic, and administrative elites. France
forced its colonies already in 1900 to pay for virtually all their expenses from own
revenues. Also British colonies were increasingly expected to be self-funding. Self-
funding usually meant higher traditional taxes on indigenous populations, includ-
ing head and hut taxes. Yet, it also increased the pressure to tax white settlers,
salaried officials, metropolitan corporations, and other beneficiaries of colonialism
through modern income taxes.
Economic backwardness has not hindered colonial tax introductions. To the
contrary, it appears as if modern income taxes were often introduced precisely
because colonial societies were so backward that colonial rulers were desperate to
tap into the rents of the few enclaves of economic modernity such as harbours,
mines, railway networks, foreign companies, or the colonial administration. The
result was a dualist tax structure with modern PITs and CITs applying to mostly
white taxpayers in urban centres, and ‘native’ taxes, such as the poll or the hut tax,
levied on indigenous taxpayers in the large rural hinterlands. After independence,
many governments tried to extend modern taxation to these hinterlands to get rid
of the much resented ‘native’ taxes. As Frankema and van Waijenburg argue
(Chapter 4, this volume), this often proved to be a recipe for disaster because
important preconditions of successful implementation were missing: the formal-
ization and monetization of economic exchanges and an effective tax administra-
tion. Postcolonial governments inherited modern taxes from their colonizers but
not the social and economic modernity needed to successfully operate them on a
national scale.¹⁷
In short, colonialism has not hindered the introduction of modern taxes.
However, it has shaped their adoption in specific, not necessarily salutary ways.
The timing is often similar to sovereign tax introductions but the logic is different,
driven by structural power in the global system rather than by domestic politics.

1.6 Questions and Extensions

Do Western trends in tax modernization represent a general developmental

pathway or a unique course of fiscal evolution? The chapters of this volume

¹⁷ Todor (Chapter 5, this volume) makes a similar point about post-communist states. As he shows,
all these states introduced modern taxes almost in unison after 1990. Yet, their capacity to derive
revenue from these taxes depends to a large extent on the state capacity they had developed before or
during communism.
30     

suggest that the Western pathway was not so special after all. Analytically, war,
recession, democracy, and less consistently socio-economic modernization have
been associated with the introduction of modern taxes in Western and non-
Western world regions alike. However, the pattern of association has varied
over time, across taxes, and most prominently across different modes of tax
introduction: colonial and sovereign tax introductions were very different pro-
cesses even though they were driven by essentially the same variables. Empirically,
the transition to modern taxation did not start in Western countries and then
spread to the rest of the world but it included non-Western countries right from
the beginning. Countries in different world regions adopted similar taxes at
roughly similar points in time. Tax modernization has been a global process.
To be sure, the chapters rely exclusively on observational evidence. In times of
causal inference, this may appear poor and old fashioned. Yet, as Gary King,
Robert Keohane, and Sidney Verba have observed, ‘it is hard to develop explan-
ations before we know something about the world and what needs to be explained
on the basis of what characteristics’ (1994, 34). It is a particular strength of this
volume to point towards phenomena in need of explanation. We highlight three.
First, what explains the surprising spatial extension and temporal coherence of
the global process of tax modernization? While the chapters have not asked this
question, some potential explanatory factors can be gleaned from them. One
factor is the global diffusion of modern tax ideas through learning and emulation
(Simmons et al. 2008; Jahn 2006; Maggetti and Gilardi 2016). Once modern taxes
had emerged, and gained credence and currency, their introduction became a
standard response to whatever revenue or redistributive problem a particular
country encountered. The wars, recession, economic conditions, or political
regimes may have varied cross-nationally, but the fiscal response was the same.
The timing of the emergence of new modern taxes set the rhythm for their global
adoption.
Another factor is the international interdependence of fiscal problems. Wars,
recessions, socio-economic modernization, or political democratization usually do
not hit countries individually but as a group: states are at war with other states,
transmit booms and busts through international trade and investment, and dem-
ocratize in waves. In other words, these events are not just triggers of domestic tax
policy change but conduits of international diffusion that synchronize tax modern-
ization across space and time. Global shocks like the two world wars or the Great
Depression have fuelled tax introductions worldwide. Regional events like the
decolonization of Latin America in the early nineteenth century or the end of
communism in the late twentieth century have brought surges of regional intro-
ductions in their wake as countries started competing with each other for inter-
national investments (Simmons et al. 2008; Jahn 2006; Maggetti and Gilardi 2016).
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great power of attorney from American citizens to their only
American government—gives no power whatever to the states or
their governments. Nevertheless, with amusement and absolute
incredulity, we shall hear every statesman of 1917 and every lawyer
of 1920 assume and act and argue upon the extraordinary concept
that the Fifth Article of that Constitution is a great power of attorney
to the state legislatures as attorneys in fact for the American citizens.
“We all know the severe scrutiny to which the Constitution was
exposed—some from their own knowledge, others from different
sources. We know with what jealousy, with what watchfulness, with
what scrupulous care its minutest provisions were examined,
discussed, resisted, and supported by those who opposed and those
who advocated its ratification.” (4 Ell. Deb. 486.) So spoke Martin
Van Buren in the Senate on April 7, 1826. We sit in the conventions
which made the Constitution of which he spoke. We listen to every
word that is said therein. We hear the Fifth Article explained by its
worder, Madison, as nothing but a mode of procedure. From not one
of the opponents of the Constitution, not even from Henry, do we
hear a single word of attack upon the Fifth Article except as to the
weakness of the mode of procedure which it provides for evoking the
power of the “people” themselves, assembled in “conventions” of the
very same kind, to withdraw from the one American legislature, the
Congress, some enumerated power of the First Article which is
found oppressive to individual liberty. On the contrary, we not only
hear no single word of complaint that the Fifth Article or any Article
gives one iota of power to the state legislatures, but the whole
complaint of all the opponents of the Constitution which we do hear
is that it practically destroys all existing ability and power of those
state governments. Only a moment ago we have heard Henry ask:
“If you adopt this Constitution, why continue the state legislatures at
all?”
Anticipating the extraordinary concept which we are later to hear in
1917 and 1920, that the citizens of America by the Fifth Article made
a collection of the state legislatures an omnipotent government over
everything in America, including every individual right, we wonder if
the constitutional thinkers of 1917 and 1920 remember that we are
sitting with a people who, just five years before the conventions in
which they and we sit, ended an eight-year war to make certain that
there never again should be a government of that kind in America, to
make certain that they themselves should never be the “subjects” of
any government or the citizens of any nation whose government
should have even one power to interfere with individual liberty,
except power of that kind granted directly by its citizens themselves.
It was Maclaine in the North Carolina convention who first used
the exact expression that the Americans, who sit in the conventions
where we are, were a people “better acquainted with the science of
government than any other people in the world.” In the same
convention, on July 29, 1788, this is what he had to say about the
consistent attack upon the Constitution, because it robbed the state
legislative governments of so much of their previous power. “Mr.
Chairman, that it will destroy the state sovereignty is a very popular
argument.... Government is formed for the happiness and prosperity
of the people at large. The powers given it are for their own good....
The powers to be given the general government are proposed to be
withdrawn from the authority of the state governments, in order to
protect and secure the union at large. This proposal is made to the
people. No man will deny their authority to delegate powers and
recall them, in all free countries.... It may be justly said that it [the
Constitution which contains the Fifth Article] diminishes the power of
the state legislatures, and the diminution is necessary to the safety
and prosperity of the people.” (4 Ell. Deb. 180.) It certainly would
have surprised Maclaine, as well as all the Americans in those
conventions, to have heard any one of themselves stating that the
same Constitution vested the state governments with an
omnipotence they had never possessed, the very omnipotence
denied to the British Parliament eleven years earlier.
In the Virginia convention we hear Madison, who drafted and
suggested the Fifth Article at Philadelphia, speak of the important
distinction between the makers of the federal Articles of 1781, only
seven years made, when we sit in that Virginia convention, and the
“convention” makers of the proposed Articles of the new national
Constitution. If these “conventions” make it, he says, it will be a
government established, not through the intervention of the
legislatures but by the people at large. Fie goes on to say “In this
particular respect, the distinction between the existing and proposed
governments is very material. The existing system has been derived
from the dependent derivative authority of the legislatures of the
states; whereas this is derived from the superior power of the
people. If we look at the manner in which alterations are to be
made,” now referring directly to the Fifth Article, “the same idea is, in
some degree, attended to.” (3 Ell. Deb. 94.)
We feel that it will be quite difficult, when we come later to the
constitutional thinkers of 1917 and 1920, for them to convince us that
Madison meant his Fifth Article to alter “the dependent derivative
authority of the legislatures of the state” and, whenever another
government makes the suggestion, put that dependent authority
above what he calls “the superior power of the people.”
And we feel that these “constitutional thinkers” will find it
impossible to convince us when we recall Madison’s other words,
directly referring to his Fifth Article and the existing power of the
people, mentioned therein by the word “conventions.” These are the
words to which we allude: “Were it [his Fifth Article] wholly national,
the supreme and ultimate authority would reside in the majority of
the people of the Union, and this authority would be competent at all
times, like that of a majority of every national society, to alter or
abolish its established government.” It is Madison himself who puts
the one word “majority” in italics. He does so to call attention to the
fact that his Article leaves “the supreme and ultimate authority” in the
people (named as “conventions” in his Article) but not necessarily
capable of exercise by the majority in any constitutional manner. He
goes on to explain this very fact by saying that when the mode of
procedure prescribed in his Article is read, it is found that “in
requiring more than a majority, and particularly in computing the
proportion by states, not by citizens, it departs from the national and
advances towards the federal character.” (Fed. No. 39.)
In New York we find Hamilton, who seconded the suggestion of
Madison’s Fifth Article at Philadelphia, almost immediately after he
had stated that there would be no danger in permitting Congress to
propose amendments since “the final decision in the case will rest
with the people.” As we recall, Hamilton said this when the tentative
Fifth Article mentioned no one but the people, “conventions,” as the
maker of future Articles, because he and Madison and their
associates at Philadelphia, whose minds had so far been
concentrated upon the national First Article, had not yet grasped the
fact, later stated by Hamilton to be his conviction, that all future
changes would probably relate “to the organization of government
and not to the mass of its powers.” We are, therefore, interested to
find Hamilton, in New York, on Friday, December 14, 1787, pointing
out that “It has not a little contributed to the infirmities of the existing
federal system that it never had a ratification by the people. Resting
on no better foundation than the consent of the several legislatures,
it has been exposed to frequent and intricate questions concerning
the validity of its powers.... The possibility of a question of this nature
proves the necessity of laying the foundations of our national
government [the First Article grant of national powers] deeper than in
the mere sanction of delegated authority [referring directly to the
state legislatures which are mentioned in the Fifth Article]. The fabric
of American empire ought to rest on the solid basis of the consent
of the people. The streams of national power ought to flow
immediately from that pure, original fountain of all legitimate
authority.” (Fed. No. 22.) The capitals are those of Hamilton himself.
We rather feel that his stress upon the “people” sharply contrasted
with the state “legislatures,” as the only legitimate direct source of
national power, such as is granted in the First Article and the
Eighteenth Amendment, will be somewhat of a shock to the
“constitutional thinkers” of 1917 and 1920. Sitting in the conventions
of old, we rather recognize the capitalized words, where Hamilton
says that national power in America “ought to rest on the solid basis
of the consent of the people,” as a direct echo from the Statute of
’76, enacted only eleven years before those conventions. That
Statute says that every just power of government must be derived
directly from the governed.
And we become rather convinced that Hamilton and Madison,
when submitting the Fifth Article at Philadelphia, never worded it so
that national power in America could be granted through the
illegitimate authority of the state legislatures, when we read what
either one or both of them have to say on Tuesday, February 5,
1788, in The Federalist, No. 49. “As the people are the only
legitimate fountain of power, and it is from them that the
constitutional charter, under which the several branches of
government hold their power, is derived, it seems strictly consonant
to the republican theory to recur to the same original authority”—a
direct reference to the “conventions” of the Seventh and the Fifth
Articles—“whenever it may be necessary to enlarge, diminish, or
new-model the powers of government.”
If we ever had any doubt as to what Hamilton meant the Fifth
Article to provide, our doubt is ended forever when we hear
Hamilton, in the New York Convention, speak of the state
legislatures, which the “constitutional thinkers” of 1917 and 1920
assume to have been made attorney in fact for the American people
for every purpose by that Fifth Article. “Look through their history,” he
says, speaking of those state legislative governments. “What
factions have arisen from the most trifling causes! What intrigues
have been practiced for the most illiberal purposes! Is not the State
of Rhode Island, at this moment, struggling under difficulties and
distresses, for having been led blindly by the spirit of the multitude?
What is her legislature but the picture of a mob?” Most of the states
“are either governed by a single democratic assembly, or have a
senate constituted entirely upon democratic principles. These have
been more or less embroiled in factions, and have generally been
the image and echo of the multitude.... Let us beware that we do not
make the state legislatures a vehicle in which the evil humors may
be conveyed into the national system.” (2 Ell. Deb. 317.) When
Hamilton knew that these state legislatures were not the legitimate
source of national powers in a republic and when he had this view of
their general character, will any sane man believe that he advocated
that the citizens of America should make these legislatures (although
the citizens of America elect not a single member in them) absolute
attorney in fact for the citizens of America for all purposes? Will any
sane man believe that he proposed to substitute them, as grantors of
national power, for the “conventions” of the Fifth Article, which
“conventions” already excited the admiration of the entire world,
according to the author of the Fifth Article, as the only safe or
effective mode in which the free citizens of a nation could vest its
government with any power to interfere with their own individual
liberty.
“The authority of Constitutions over governments, and the
sovereignty of the people over Constitutions, are truths which are at
all times necessary to be kept in mind; and at no time, perhaps,
more necessary than at present.” This impressive statement of the
truth that the “governments,” state “legislatures,” never were placed
by the Fifth Article above the Constitution in which it is, and above
the sovereignty of the people, mentioned therein as “conventions,”
and cannot be placed there by another government, the Congress, is
not a statement made in the heat of the controversy about the
Eighteenth Amendment. It is the statement of James Madison,
author of the Fifth Article, made in the Virginia House of Delegates in
1799;
It is becoming almost impossible for us, as we sit in these
conventions and hear every word that is said, to understand the
source of the modern thought, if we can dignify it by calling it
“thought,” that the Fifth Article is a power of attorney from the citizens
of America to the state governments, every member of which is
elected by the citizens of the respective states and not by the
citizens of America. It is beginning to grow upon us that any such
“thought” is based on sheer assumption and that the entire record of
the “conventions” is a closed book to those who hold the
assumption. We know that they have the explicit statement of the
Tenth Amendment, that the Constitution gives no power of any kind
to any donee except the one new American government, the
government with the enumerated powers of the First Article. As no
power of attorney was ever written or can be conceived except one
which grants the attorney in fact some power, the Tenth Amendment
makes absolutely certain that neither the Fifth Article nor the entire
Constitution gives to the state legislatures any power as attorneys in
fact for the citizens of America.
Moreover, breathing the atmosphere of those first “conventions” of
the kind named in the Seventh and the Fifth Articles, the
“conventions” where individual liberty of the American is the only
object of advocate and opponent of the Articles under consideration,
we begin to sense that the holders of the impossible assumption
have never fully grasped the amazing and vital distinction between
“state legislatures” and “conventions” of the kind named in the
Seventh and the Fifth Articles. When we shall hear the “constitutional
thinkers” of 1917 and 1920 speak of the “legislatures” and the
“conventions” as two different agents given omnipotent attorneyship
in fact over all the individual rights of the citizens of America, we
shall wonder if these thinkers appreciate that the “state legislatures”
are permanent bodies, always existing, and that the “conventions” of
the Fifth Article are, to the “conventions” in which we sit, bodies that
never would have an existence until some future moment, when the
American citizens themselves would again be called to assemble in
and thus make those “conventions.” Nothing could show more
clearly that the “conventions” of the Seventh Article looked upon the
“conventions” of the Fifth Article, not as the donee of any power of
attorney, but as themselves or their posterity, the citizens of America,
assembling again to determine whether there shall be any change in
the distribution of power to interfere with their individual liberty. And
our thought, re-echoed again and again by Marshall and others from
the Bench of the Supreme Court in the century that follows the first
assembling of these “conventions,” seems but the repetition of what
we hear said in the Massachusetts Convention as the tribute of its
Americans to the Fifth Article.
On January 23, 1788, the Americans, assembled in
Massachusetts, took up the consideration of that Article. As in every
convention, there had been great opposition to the earlier Articles; as
in every convention, nearly all of it had been to the great national
powers of the First Article granted to the new government and taken
from the state governments; and, as in every convention, almost all
of this opposition had been the continued complaint that the state
governments were being destroyed.
It was not that the Americans loved the state governments. The
truth is that, like every natural human being, they objected to all
governments. Their sole thought was fear of oppressive government
infringement upon their individual liberty. In this respect, the
Americans in each convention feared their own legislative
government less than the new proposed Congress, because they
would elect all the members of the former and only a few members
of the latter. If it had been suggested, by any of the many opponents
of the new Constitution, that any possible twisting of the words of the
Fifth Article meant that governments outside their state, not one of
whose members they themselves would elect, could infringe upon
their every individual right, without any constitutional restraint, the
record of every convention would have been one unanimous “no,”
against the new Constitution. But, as no “constitutional thinker” of
1917 or 1920 sat in any of those conventions, no such suggestion
was ever made therein.
And so, on that January 23, we hear the Fifth Article read in that
Massachusetts convention, and we see Rufus King rising and we
hear him state that “He believed gentlemen had not, in their
objections to the Constitution, recollected that this Article was a part
of it; for many of the arguments of gentlemen were founded on the
idea of future amendments being impracticable.” He dwelt “on the
superior excellence of the proposed Constitution in this particular,
and called upon gentlemen to produce an instance, in any other
national constitution, where the people had so fair an opportunity to
correct any abuse which might take place in the future administration
of the government under it.”
And then we hear Dr. Jarvis: “Mr. President, I cannot suffer the
present Article to be passed, without rising to express my entire and
perfect approbation of it. Whatever may have been my private
opinion of any other part, or whatever faults or imperfections I have
remarked, or fancied I have seen, in any other instance, here, sir, I
have found complete satisfaction: this has been a resting place, on
which I have reposed myself in the fullest security, whenever a doubt
has occurred, in considering any other passage in the proposed
Constitution. The honorable gentleman last speaking has called
upon those persons who are opposed to our receiving the present
system, to show another government, in which such a wise
precaution has been taken to secure to the people the right of
making such alterations and amendments, in a peaceable way, as
experience shall have proved to be necessary. Allow me to say, sir,
as far as the narrow limits of my own information extend, I know of
no such example. In other countries, sir,—unhappily for mankind,—
the history of their respective revolutions has been written in blood;
and it is in this only that any great or important change in our political
situation has been effected, without public commotions. When we
shall have adopted the Constitution before us, we shall have in this
Article an adequate provision for all the purposes of political
reformation. If, in the course of its operation, this government shall
appear to be too severe, here are the means by which this severity
may be assuaged and corrected.... We have united against the
British; we have united in calling the late federal convention; and we
may certainly unite again in such alterations as in reason shall
appear to be important for the peace and happiness of America.” (2
Ell. Deb. 116.)
No man ever voiced such sentiments, no conventions of
Americans ever listened to them, with any knowledge or thought that
the Fifth Article, “the wise precaution” to secure the liberty of the
individual if the government with the national powers of the First
Article oppressed that liberty, was itself a grant to another
government, ten legislatures outside of the Massachusetts in which
that convention was held, to infringe upon the individual liberty of
every American in Massachusetts on every subject without any
constitutional restraint.
And so, we average Americans end our education in the only
“conventions,” named in the Seventh or the Fifth Articles, which yet
have assembled. And we end that education knowing that there is
nothing anywhere in the Constitution those conventions adopted,
and especially nothing in the Fifth Article, which changed the free
American into a subject of any government or governments in
America. Everything we have heard—and what we have repeated is
but little of what we have heard—serves but to emphasize the only
meaning of its “apt, precise and classic English,” the plain meaning
which we got from its language when we read it at the beginning of
these conventions with the Americans who made it.
 It is, as its author explained it, naught but a constitutional mode of
procedure in which may be thereafter exercised, in a constitutional
manner, either the limited ability of state governments to make
Articles which do not concern themselves with the infringement of
individual liberty or the unlimited ability of the people themselves, the
“conventions” of the kind in which we have sat, to make any Articles.
The procedure prescribed for such constitutional exercise is
simplicity itself to those who sit in those conventions. It is exactly the
procedure just followed (up to the point where the work of any
proposer of a new Article and its mode of ratification must end) by
the Philadelphia Convention which drafted it and the other six
Articles. The Philadelphia Convention found itself without any
constitutional mode of procedure in which could be evoked to
exercise the existing and exclusive power of the people of America
to grant any government power to infringe upon the individual liberty
of the American citizens. There being no constitutional mode of
procedure, no designated body to draft Articles with such grants and
to propose them and to ascertain and propose the valid mode of
ratification for them, the Philadelphia Convention did that work,
guided only by basic American doctrine, the Statute of ’76 and the
experience of the “conventions” which had made the national Articles
of 1776. It followed a certain mode of procedure in the doing of these
things, knowing and stating that to draft Articles and propose them
and ascertain and propose the right mode of ratification for them is
not the exercise of any power. With a knowledge which we of a later
generation never should have forgotten—and which we who have
been educated with them never will forget—the Philadelphia
Convention knew that there were two makers of Articles in America,
each of which had exercised its respective and different ability to
make them, during the eleven years which preceded the
Philadelphia Convention. They knew that every Article that was
national could be made by no one but the people themselves, the
“conventions,” which had made the national Articles of ’76 and which
are named as the makers of all future Articles of that kind in the
Seventh and the Fifth Articles proposed by Philadelphia.
And so, when the Philadelphia Convention had drafted its Articles
and was about to propose them, it recognized the legal necessity of
ascertaining, from the nature of those Articles, whether they were in
the power of both or only of one of those existing makers of Articles.
In the ascertainment, with their minds on the First Article grants of
national power to interfere with individual liberty, they knew that no
governments in America could make an Article of that kind. Their
ascertainment was then ended and they knew that they must
propose that mode of ratification which would send their Articles to
the only valid ratifiers, the people themselves, the “conventions” of
the Seventh and the Fifth Articles.
This was the procedure they had followed, when there was no
constitutional mode of procedure provided. And so, with the
extraordinary wisdom that characterized everything they did, that
Philadelphia Convention wrote exactly the same procedure into the
Fifth Article so that never again there might be lacking in America a
constitutional mode of procedure for the evoking and the exercise of
the only power that is ever exercised when constitutional Articles are
made, the power of making them. As the Philadelphia Convention
ended its existence with its own proposals, some new body had to
do that work, when any new Article was to be proposed. As the work
of the Philadelphia Convention had not been the exercise of any
power but merely the work of proposing, it was a certainty that the
new constitutional mode, exactly the same mode as that of
Philadelphia, would also be the exercise of no power. And so, the
Philadelphia Convention named the Congress (or a convention
demanded by the state legislatures) to do the work of the
Philadelphia Convention in drafting and proposing any new Article,
and it named the Congress to perform the duty of ascertaining (by
the nature of the new drafted Article) which of the two makers could
make it, and then to propose a mode of ratification by which it would
be validly ratified by such competent maker. As to the only powers
ever to be exercised in the making of any new Article, the power of
legislatures to make federal Articles, and the exclusive power of the
people or “conventions” to make national Articles, the constitutional
mode of procedure did not (nor could it, if Americans were not to
become “subjects”) give the governments any of the exclusive ability
of the people or “conventions,” and it did not (nor could it, if America
were to be a republic) alter the existing ability of the majority of the
American people to make their governments what they will. But, for
the very practical purpose which Madison so clearly explained, the
purpose of providing some check upon the tyranny of the majority or
an aggressive minority over the individual rights of all Americans, the
Fifth Article procedure could and did fail to provide any
constitutional method in which government power to interfere with
individual liberty, as all surrendered power of that kind was
distributed between different governments in the Constitution, could
be changed in any way or transferred from one government to
another, unless the “conventions” of the American citizens in three
fourths of the states said “Yes” to any proposed change or transfer.
The Philadelphia Convention having proposed this particular
check upon the existing ability of the people themselves to oppress
individual liberty, a check which makes the words “by conventions in
three fourths thereof” by far the most important words, the Fifth
Article goes on to prescribe exactly the same check on the exercise
of the ability of the state legislatures to make federal Articles.
That the Fifth Article, a constitutional mode of procedure for the
exercise of two different existing abilities, was not a grant of any
power to the state legislative governments is something that was
known to every man in the conventions which made that Fifth Article.
In the Pennsylvania convention, Wilson plainly stated the
knowledge of all that the supreme power “resides in the people, as
the fountain of government; that the people have not—that the
people meant not—and that the people ought not—to part with it to
any government whatsoever. In their hands it remains secure. They
can delegate it in such proportions to such bodies, on such terms,
and under such limitations, as they think proper. I agree with the
members in opposition, that there cannot be two sovereign powers
on the same subject.... My position is, sir, that, in this country, the
supreme, absolute, and uncontrollable power resides in the people
at large.” (2 Ell. Deb. 456 et seq.)
When more than half a century had passed, the same thing was
known to those who knew American Constitutional Law.
 “It is obviously impossible for the whole people to meet, prepare
and discuss the proposed alterations, and there seems to be no
feasible mode by which an expression of their will can be obtained,
except by asking it upon the single point of assent or disapproval.
But no body of representatives, unless specially clothed with power
for that purpose by the people when choosing them, [ergo, no
permanent state governments or legislatures] can rightfully take
definitive action upon amendments or revisions; they must submit
the result of their deliberations to the people—who alone are
competent to exercise the powers of sovereignty in framing
the fundamental law—for ratification or rejection.”
So spoke the great Cooley in reference to making changes in
national constitutions in his work on Constitutional Limitations (7th
ed., 1903, at p. 61).
When one hundred and seventeen years had passed since the
conventions in which we just sat, the same thing was known in the
Supreme Court, in 1907.
The powers the people have given to the General
Government are named in the Constitution, and all not there
named, either expressly or by implication, are reserved to the
people and can be exercised only by them, or upon further
grant from them. (Justice Brewer in Turner v. Williams, 194 U.
S. 279.)
 CHAPTER XIV
SEVENTEEN ARTICLES RESPECT HUMAN
FREEDOM

“For my own part, I acknowledge a thorough conviction that

Amendments which may, upon mature consideration, be thought
useful, will be applicable to the organization of the government, not
to the mass of its powers.” (Fed. No. 85.)
This was the statement of Hamilton to the American people when
he was asking them, about to assemble in their conventions, to
make their First Article grants of enumerated powers to interfere with
their individual freedom and to make their Fifth Article mode of
procedure, in which they could exercise constitutionally their
exclusive ability, assembled again in “conventions,” to add or
subtract from that grant of enumerated powers of that kind.
When he used the words, “mass of its powers,” he referred directly
to that First Article grant. It contains all the powers that were ever
given to any government to interfere with the individual freedom of
the American citizen. He knew what the Supreme Court clearly
declared in United States v. Cruikshank, 92 U. S. 542, that, beyond
the scope of its enumerated powers, there is no government of the
American citizens. He knew that, in the geographical territory which
is each state, there would thereafter be two governments, the
government of enumerated powers, governing the American citizens
in that state under the First Article grants from the American citizens,
and the state governments, governing the citizens of the state, under
whatever grants of national power its state citizens gave that
government.
The two governments in each state stand in their respective
spheres of action in the same independent relation to each
other, except in one particular, that they would if their authority
 embraced distinct territories. That particular consists in the
supremacy of the authority of the United States when any
conflict arises between the two governments. (Justice Field, in
Tarble’s case, in the Supreme Court, 13 Wall. 397.)
With such knowledge, he would have found it impossible to make
the blunder of assuming that either government could give or join
with governments in giving to the other any power to interfere with
the citizens of the grantee in their enjoyment of individual liberty. He
knew that, “In our republican forms of government, the absolute
sovereignty of the nation is in the people of the nation; and the
residuary sovereignty of each state, not granted to any of its public
functionaries, is in the people of the state.” (Story, 1 Ell. Deb. 65.)
When Hamilton stated, in those days of 1788, his conviction that
new Articles would relate to the “organization of government and not
to the mass of its powers,” he was epitomizing the common
knowledge of everyone, at that time, that the new Constitution was
both federal and national. He was predicting that the power to
interfere with individual liberty, to the extent which Americans had
surrendered any power of that kind to their governments, had been
so wisely distributed, between the government of the citizens of
America and the political entity which was each state, that it would
never be necessary for the citizens of America to alter that
distribution by giving any more to their government. That is why he
prophesied that no new Article of the kind which only “conventions”
of those citizens can make, Articles changing the “mass of powers”
granted to that government by the First Article, would ever be
needed.
And we recall that this conviction probably influenced the last day
remembrance in the Philadelphia Convention by Madison and
himself, that the Fifth Article should also contain some reference to
the state legislatures and their future exercise of their existing
abilities to make federal or declaratory Articles, which do not change
the “mass of powers” in that First Article grant and do not relate to
government interference with the individual liberty of the American
citizen.
 The statement of Hamilton was not meant as a prophecy. It was
the result of a great mind reasoning from cause to probable effect.
As we come down through the century or more that follows that
statement and reach the beginning of the year 1917, we pay our
tribute to a mind which could reason so correctly as to what would
happen for more than a hundred years. We shall find that never
again, from 1787 to 1917, did experience find it necessary that the
“conventions” of the American citizens, the “conventions” named in
the Seventh and the Fifth Articles, should again be assembled to
alter, as they alone can alter, the mass of enumerated powers to
interfere with their own individual liberty, which they granted in that
First Article.
It is a striking commentary upon the ability of Hamilton and his
generation, when contrasted with our modern “constitutional
thinkers,” that he knew and appreciated what would happen in a
century to come, while they have not understood what had
happened in a century that had gone, although the record of that
century was spread out before them to read. None of our leaders
have appreciated the fact that every one of the first seventeen
Amendments to our Constitution was of the kind that state
legislatures had ability to make before our Constitution was even
drafted at Philadelphia, because all were federal (or declaratory)
Articles and were not national Articles. If they had known, after these
seventeen Amendments were history, what he prophesied before the
Constitution itself was adopted, the story of the last five years might
not have been what we shall learn hereafter that it was.
That we may know, of our knowledge, what he prophesied and
what they entirely overlooked and ignored, let us briefly examine the
nature of those seventeen Amendments. Thus we will learn why
governments, known at Philadelphia in 1787 to be incompetent to
make national Articles, could and did make those seventeen Articles
in the constitutional mode of procedure which the Fifth Article
provided for the exercise of their existing ability limited to the making
of federal or declaratory Articles.
The first ten Amendments were declarations insisted upon by the
American citizens, assembled in “conventions” where we have sat,
as specific security against government usurpation of power over
their individual freedom. The Supreme Court has repeatedly
declared that everything in those ten Amendments was in the
Constitution when it was ratified by those “conventions” and that the
Amendments simply declared what the will of the people themselves,
assembled in those “conventions,” had already established as the
fundamental law in America. Certainly no man would challenge the
prophecy of Hamilton on the theory that any one of those
Amendments added to the mass of government powers to interfere
with human freedom. They are, each and every one of them, the
declaration that government cannot do “this” and government cannot
do “that.” So far from being national Articles, the kind which only
“conventions” of American citizens could or can make, the kind which
tell government that it can command the American citizens on this or
that subject, they are all Articles which tell government that it cannot
command the American citizen. And, for the further security of the
individual freedom of the American citizen, a security never needed
more than in this year 1923, the Tenth Declaration emphatically
declares who it is that retains the exclusive ability to alter, in one
iota, “the mass of powers” (over the individual freedom of the
American citizen) granted by them in the First Article and the
exclusive ability to exercise any power of that kind over them, which
was not granted in the First Article. Who can deny that, stated in our
own words, this is what we find in the plain declaration of the Tenth
Amendment? “We, the people of America, assembled in our
conventions, have granted to the American government enumerated
powers of the First Article. They are the only powers of that kind
delegated to any government, by which it can interfere with our
individual freedom in our capacity as American citizens. All powers,
which the citizens of each state have hitherto had and which we
have not taken from them herein, we have left with them; and the
citizens of each state can grant so much of said powers as they
please to their own government to govern them as citizens of that
state. All other powers, outside those we have granted to our
government to interfere with us and those we have left to the citizens
of each state for their own respective exercise, we reserve
exclusively to ourselves, in our capacity as citizens of America. And,
if any government should deem it wise that any one of these powers
(which we so reserve exclusively to ourselves) should be exercised,
we have provided in the Fifth Article the mode of procedure in which
we, assembled in our conventions, can constitutionally exercise
it or grant it to the government which wants to exercise it.”
The powers the people have given to the General
Government are named in the Constitution, and all not there
named, either expressly or by implication, are reserved to the
people and can be exercised only by them, or upon further
grant from them. (Justice Brewer in Turner v. Williams, 194 U.
S. 279.)
Later herein we Americans, fresh from the “conventions” which
demanded these declarations for the better protection of individual
liberty, are going to hear expounded a doctrine, which would mean
that these declarations were themselves the American Magna
Charta. We are going to hear, to our amazement, that these
declarations were a compact between an omnipotent government
and its subjects, ourselves, who have always imagined that we were
“citizens” and not “subjects.” We are going to hear, to our utter
incredulity, that these declarations are the promise of a government
—itself omnipotent over ourselves and our Constitution and our
government which we thought to be the supreme government in
America—that we, the subjects of that omnipotent government, may
have certain privileges which this omnipotent government will not
take from us.
When first we shall hear this 1917 resurrection of the Tory concept
that government is master and Americans are “subjects,” that
government is the state and we are its assets, we shall naturally be
astounded and indignant that even a few inhabitants should still
retain what Madison called “the impious doctrine” of the Old World,
that people are made for governments, not governments for the
people. Quickly, however, we shall become alarmed to find how
wide-spread, among the “constitutional thinkers” of our own
generation, is the complacent acceptance of the Tory concept and to
learn that, when its application in any given instance injures a client
of one of those constitutional thinkers, no matter how he may argue
against the application in the particular instance, he neither knows
nor uses for his client the fact that the Statute of ’76 repealed the
doctrine on which Magna Charta rested, the Tory concept that
government is the state and that we are its “subjects.”
It will be difficult for us to understand these leaders of our
generation. In addition to what we have just lived through with the
early Americans, these leaders will have before them countless
decisions of the Supreme Court, flatly contradicting the Tory concept
on which all these leaders reason. “The concessions of Magna
Charta were wrung from the King as guarantees against the
oppressions and usurpations of his prerogatives.... The omnipotence
of Parliament over the common law was absolute, even against
common right and reason. The actual and practical security for
English liberty against legislative tyranny was the power of a free
public opinion represented by the Commons.” We are going to find
many of our leaders with the fixed Tory concept that there is in
America a legislative government, unknown to the generation of
Americans who created all government in America, and that this
omnipotent government can do whatever it pleases, without any
constitutional restraint, with almost everything in America, including
ourselves and our Constitution and our American government.
Curiously enough, we are going to be told that the one thing, in
which this omnipotent legislative government falls short of absolute
omnipotence, has nothing to do with any individual human freedom,
but is its inability to change the equal representation of every state in
our Senate. It will be quite amazing to us to hear these men, not
proving this Tory concept but stating it as axiomatic American law
and on it basing their every argument and audaciously claiming that
our Supreme Court has no right even to consider whether it is so or
not. But there will be something to alarm us even more. We will find
our other “constitutional thinkers,” by circumstances obliged to
challenge some particular deduction from this Tory concept, without
any knowledge of the invincible facts which challenge the concept
itself. To most of these men it will be as if the Statute of ’76 had been
repealed and the result of our Revolution reversed, in 1787, by the
very “conventions” in which we have sat. It will be our amazement to
hear that these “conventions” never created the citizen of America
but that the American people, assembled therein, voluntarily made
themselves “subjects” of the omnipotent government. And these
modern “constitutional thinkers” will discuss this omnipotent
government on the basis that those “conventions” made that
particular government (not the one to whom the First Article grants
its powers) attorney in fact for the general people of America,
authorized to interfere with their individual freedom, “on all matters
whatsoever.” To most of these men, it will be as if the Supreme
Court, in countless ways, had not declared:
In this country, written constitutions were deemed essential
to protect the rights and liberties of the people against the
encroachment of power delegated to their governments, and
the provisions of Magna Charta were incorporated into bills of
rights.... Applied in England only as guards against executive
usurpation and tyranny, here they have become bulwarks
against arbitrary legislation; but in that application, as it would
be incongruous to measure and restrict them by the ancient
customary English Law, they must be held to guarantee, not
particular forms of procedure, but the very substance of
individual rights to life, liberty and property.
Of course, fresh from the conventions of old, we shall know that
these men are talking nonsense. We shall know that the last two
quoted statements from the Supreme Court, in Hurtado v. California,
110 U. S. 516, are but the expression of what was once the common
knowledge of a people then “better acquainted with the science of
government than any other people in the world.” But, as our
knowledge shall be as the knowledge of the Americans of old, who
fought an eight year war of sacrifice to make any such Tory concept
in America absolute nonsense, it is well for us, while we are
examining the nature of the first seventeen Amendments of our
Constitution, to keep in mind one thing, which we now know and
which, if it had not been forgotten, would have prevented the
monumental blunder of the generation in which we ourselves are the
American citizens. This one thing is the fact that the Constitution,
made in the conventions we have just left, is a federal and a national
Constitution. That fact and its influence upon the Convention, which