What I’m Reading: Rebellion, Rascals and Revenue, Michael Keen and Joel Slemrod

Author: George Spencer

Taxes are a joke. Really, taxes are laugh-out-loud funny. At least they are in the hands of tax wizards Joel Slemrod, a professor of economics at the University of Michigan, and co-author Michael Keen of the International Monetary Fund.


The Wall Street Journal called their brand-new book, Rebellion, Rascals, and Revenue, “erudite yet good-humored.” Fake news, I thought, but not so. After all, the book jacket features similar raves by former Treasury Secretary Lawrence Summers and Christine Lagarde, the president of the European Central Bank.

Far from being taxing reading, Keen and Slemrod’s book took me on a romp through 4,000 years tax history. It’s a perfect gift for your CPA, or anyone seeking untoppable zingers for the next faculty club meeting.

Imagine a freshman economics text peppered with anecdotes about Lady Godiva, William Tell, Genghis Khan, Shakespeare, Thomas Paine, Sam Adams, Martin Luther King and Vlad the Impaler, all designed to explain the “spectacular failures and successes” of various taxes and the “messy realities” of making tax policy, and you have this book in an EZ form to understand.

In the case of the real-life model for Count Dracula, Vlad the Impaler, taxation was a pointed — and painful — affair. In 1459, when merchants in a Romanian town failed to pay tribute, he burned their city and had them impaled. “Ensuring that taxes due are collected is indeed largely a matter of sticks and carrots,” the authors write. “Sometimes, however, the stick part is taken a bit too far.”

Lady Godiva wanted her 11th-century husband, Leofric, the Earl of Mercer and Lord of Conventry, to cut taxes. He told her he’d lower the levy, but only if she rode naked through town. That she did, after making townsfolk promise not to ogle her. Fully abreast of the situation, they complied, except for a fellow named Tom, who did not, thus giving us the term “Peeping Tom.” (As punishment from above, it’s said, God blinded him.)

Leofric did cut taxes, except for people on horseback, and the authors call this yarn “the naked truth about lobbying.”

Such stories sweeten serious lessons on tax administration, evasion and policymaking. William Tell had to shoot an apple off his son’s head as a punishment for not paying taxes. Bizarre, you say? That’s a trifle compared to what the Mughal governor of Bengal once did. He forced tax scofflaws “to wear long leather drawers, filled with live cats.”

Tithing, it seems, is universal. Even the far from Christ-like Genghis Khan only demanded a 10 percent tax on his Russian rampages.

When he wasn’t penning plays, Shakespeare sold (and hoarded) grain and owned property. He was accused of tax evasion. To pay or not to pay was his question. Conscience, apparently, did not make a coward of the Bard.

English excise-tax collector Thomas Paine lost his job in 1765 for falsely claiming to have inspected goods. The times having tried his soul, he got his job back, but it’s no wonder he became a rabble-rousing pamphleteer.

Bostonians elected Sam Adams — soon to be of Boston Tea Party and lager fame — their tax collector in 1756. Ten years later he was ordered to repay £1,463, the amount he had embezzled. One online currency converter says that equals $274,474.79 in today’s money. Adams did not repay it. He knew how to monkey-wrench the system and stick it to the king.

As for the Rev. Dr. Martin Luther King, Jr., it pleases me to say he was not a tax evader. The IRS investigated him over and over. In 1960 he became the first person to be charged with tax fraud under Alabama law. He was acquitted, having sufficiently rendered unto Caesar.

Whether Elvis Presley paid his taxes, the authors do not reveal, but today he is a popular man in Ouagadougou, the capital of the West African nation of Burkina Faso. He helps this far-off land shake the peaches off its revenue tree. How? The government issues postage stamps bearing his portrait. Collectors who can’t help falling in love with the King buy them. Thus do Ouagadougouan tax administrators raise revenue: not by taxing their own citizens but by enticing not-so-suspicious noncitizens to buy sticky, perforated rectangles of colored paper that undoubtedly cannot be returned to sender.

From Slemrod and Keen I’ve learned that, through the millennia, governments have raised revenue by taxing almost everything. Chimneys, urine, windows, shadows, fireplaces, hats, wigs, candles, servants, tampons, clocks, oleo, tanning salons, childlessness, jewelry, wallpaper, mirrors, prostitutes, dogs, cats, pornography, doors, moustaches, bobbed hair, women who covered their breasts, the right to a coat of arms, beards, bachelorhood, bricks and salt.

We have the term “guinea pig” because in 1795 the British imposed an annual tax of one guinea on the perfuming powders men and women put on their wigs, many of which were pig-tailed. Those who paid the tax were guinea pigs — a term which has a bad odor about it.

Whether writing about Cleopatra (the first ruler to tax beer) or Curaçao, the authors turn again and again to a timeless truth of taxation: “When it comes to designing and implementing taxes, our ancestors were addressing fundamentally the same problems that we struggle with today.”

Consider Curaçao with caution, all ye would-be clever tax leviers. It built a pedestrian bridge in 1934 and issued a progressive tax to pay for it. Those who crossed barefoot would pay no toll, while those shod would. The human psyche being what it is, poor citizens borrowed shoes and paid the toll because they did not want others to know how bad off they were, further impoverishing themselves. Meanwhile, wealthy skinflints walked shoeless across the span.

Taxation has always been a heated topic. In England in 1662, Charles II and parliament figured that the more hearths a home had the wealthier its inhabitants would be. Trouble was, people didn’t like tax collectors haunting their hearths. Solution? A tax on windows replaced the law in 1682. This sunlight levy followed the same line of thinking — the more windows your home has, the better off you are. Plus, the taxman can could them from afar without risk of being skewered by a hot poker. Homeowners responded by bricking up windows. The battle of tax evaders and tax collectors raged on, as it does to this day.

The authors, both past presidents of the International Institute of Public Finance and winners of a National Tax Association medal for distinguished contributions to the study and practice of public finance, made career choices that left the field of stand-up comedy much poorer.

They conclude with predictions for the future of taxation. These are not so funny.

Keen and Slemrod believe that higher taxes will be one aftershock of COVID-19, due to massive increases in public debt. As has happened after other disasters, the well-off will likely pay a greater proportion of the increases.

In some countries, tax agencies already pre-populate tax returns and send them to citizens filled out, thanks to their ability to combine vast reams of information about people. It will be a bright, cold day in April when this happens in the United States, and clocks will be striking 13.

Instead, the authors foresee an end to the annual tax return. It will be replaced, they say, by some sort of ongoing, regurgitational give-and-take between tax agencies and citizens. “This system would be capable of taking both a long-and a short-term view, with tax liability determined (and perhaps remitted) and cash benefits received continuously, in light of life’s unfolding surprises,” they write.

Their most startling prediction? A person’s taxes may one day be based on genetic markers “statistically correlated with lifetime income or other measures of well-being or potential ability . . . in the way that disability, age, and marital status are often used now.”

They offer some good news about future taxes, but not for human beings. Robots will not be taxed, they say, because doing so would hamper innovation. If that sounds like a chicken-sh*t cop out, consider this fowl tax incentive: These days chicken farmers who properly dispose of their flocks’ droppings get a tax credit.

George Spencer is a freelance writer based in Hillsborough, North Carolina.