Noel D., Johnson and Mark, Koyama (2012): Standardizing the fiscal state: cabal tax farming as an Intermediate Institution in early-modern England and France.
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How did modern and centralized fiscal institutions emerge? We develop a model that explains (i) why pre-industrial states relied on private individuals to collect taxes; (ii) why after 1600 both England and France moved from competitive methods for collecting revenues to allocating the right to collect taxes to a small group of financiers—a intermediate institution that we call cabal tax farming—and (iii) why this centralization led to investments in fiscal capacity and increased fiscal standardization. We provide detailed historical evidence that supports our prediction that rulers abandoned the competitive allocation of tax rights in favor of cabal tax farming in order to gain access to inside credit and that this transition was accompanied by investments in standardization. Finally (iv) we show why this intermediate institution proved to be self-undermining in England where it was quickly replaced by direct collection, but lasted in France until the French Revolution.
|Item Type:||MPRA Paper|
|Original Title:||Standardizing the fiscal state: cabal tax farming as an Intermediate Institution in early-modern England and France|
|Keywords:||State Capacity; Standardization; Tax Farming; France; England; Transaction Costs|
|Subjects:||N - Economic History > N2 - Financial Markets and Institutions > N23 - Europe: Pre-1913
H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government
K - Law and Economics > K0 - General > K00 - General
D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, and Operations
N - Economic History > N4 - Government, War, Law, International Relations, and Regulation > N44 - Europe: 1913-
|Depositing User:||Mark Koyama|
|Date Deposited:||31. Jul 2012 20:51|
|Last Modified:||13. Feb 2013 17:02|
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