The history of state revenue production is the history of the evolution of the state. As specialization and division of labor increase, there is a greater demand on the state to provide collective goods where once there were solely private goods or no goods at all. The introduction of economies of scale in the production of state-provided goods and services augments the state’s ability to provide collective goods. Improvements in state coordination of people and resources further enhance state capacity. Constituents may come to perceive gains from trade. Certainly, they become more dependent on the state. At the foundation of...

Rulers maximize revenue to the state, but not as they please. They maximize subject to the constraints of their relative bargaining power vis-à-vis agents and constituents, their transaction costs, and their discount rates. These constraints determine the choice of revenue system. That is my hypothesis.

Rulers are predatory in that they always try to set terms of trade that maximize their personal objectives, which, I argue, require them to maximize state revenues. They do not always plunder, pillage, and exploit. However, each will, in North’s words (1981, 23), “attempt to act like a discriminating monopolist, separating each group of constituents...

The establishment of revenue production policies, the subject of the last chapter, is a problem in comparative statics. Within a given set of constraints, rulers have a given set of options. Rulers bargain a tax policy at one point in time for future points in time. They are establishing the rules of the game. However, over time taxpayers may begin to feel their taxes are too high relative to what is received in return. Compliance becomes increasingly problematic among those who feel that they are not getting as good a deal as they bargained for. No compliance procedures will work...

The story of taxation during late Republican Rome exemplifies the institutional responses of a simple state to an increasingly complex political and economic environment. Territorial expansion and growing specialization and division of labor led to realignments in the traditional distribution of power. Experiments with new techniques of taxation occurred within a context of intense rivalries for rule and new economic and political resources. The costs of achieving compliance increased with the transformation of the institutions of governance and with the imposition of taxes on non-Roman peoples. This was a period of transition in both the economy and the government. The...

In this chapter I explore changes in lay taxation by French and English monarchs from the Middle Ages to the early modern era. In tracing taxation over this period, I am able to perceive the processes that underlay the evolution of the modern state. By comparing decisions made in two countries, I am able to illuminate the causes of variation in state policies. I focus specifically on lay taxation, although I recognize that rulers had available a variety of other revenue sources.¹

The theory of predatory rule suggests that increases in the bargaining power of rulers will lead to increases...

The introduction of the direct income tax in 1799 marked an important turning point in British fiscal history. The income tax reflected a major transformation in prevailing economic thought and fundamentally altered the individual's relationship to the central state. It provided the state with both an enormous new source of revenue and access to information regarding individual wealth and lifestyle that had never before been available. Over time, increased revenues permitted the state to extend its provision of collective goods, ranging from social insurance and welfare programs to the roads and communication systems that are the infrastructure of modern business....

This chapter focuses on two very different kinds of compliance: (1) state government compliance with the Australian Commonwealth government’s imposition of a uniform income tax in 1942; (2) Australian citizens’ quasivoluntary compliance with the payment of that tax. The first resulted from increased relative bargaining power of the central government vis-à-vis the states. The second declined in the 1970s and 1980s with increased citizen perception that the tax contract violated existing norms of fairness. By investigating these events, the chapter also deals with the relationship between the bargaining power of contemporary — and democratically elected — rulers and major tax...

The theory of predatory rule proves to be a useful model for understanding revenue production historically and comparatively. By combining structural constraints and individual action into one model, the theory of predatory rule illuminates aspects of the story that might otherwise be overlooked. It provides a road map to guide the analyst through complex historical data. Moreover, and unlike other structural work that offers this guide service, its emphasis on decision making leads to explanations of what more standard structural analysts can only note or correlate.

The empirical payoffs from using the theory of predatory rule to analyze revenue production...