Tax Collection in History

Abstract

This article examines the rich variety of tax collection methods that have been employed throughout history. Three general categories have been observed: share contracts, rent contracts, and wage contracts, which differ depending on whether the government needs to measure the actual tax collected, the tax base, or the collector's effort, respectively. We develop a principal—agent model that seeks to explain the choice among these forms based on collector incentives, the value of state-specific collection effort, and measurement costs. We then review the actual use of the various forms in light of the model, both across countries and over time.