+Koyama14a Tax farming and the origins of state capacity in England and France_20150203155923外文学习资料.pdf

Available online at ScienceDirect Explorations in Economic History 51 (2014) 1 – 20 /locate/eeh Tax farming and the origins of state capacity in England and France Noel D. Johnson, Mark Koyama⁎ Center for Public Choice, Carow Hall, MSN 1D3, George Mason University, 4400 University Drive, Fairfax 22030, USA Received 13 March 2013 Available online 31 July 2013 Abstract 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—an 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. © 2013 Elsevier Inc. All rights reserved. Keywords: State capacity; Fiscal capacity; Standardization; Tax farming; Transaction costs JEL classification: N23; N44; H11