Accountancy - Taxation

By: Daniel Owen

Taxations first known systems were around 2800 BC - 3000 BC in Ancient Egypt (The first dynasty of the old kingdom). It is recorded in the time documents that Pharaoh would take a biennial tour of his kingdom; on his tour of the kingdom he would collect tax revenues from the people of the kingdom. Granary receipts on papyrus and limestone flakes are other records that were found. The bible also describes early taxation, (The new international version - Genesis, chapter 47, verse 24) these verses in Genesis states "But when the crop comes in, give a fifth of it to Pharaoh. The other four-fifths you may keep as seed for the fields and as food for yourselves and your households and your children." This was Joseph telling all the people of Ancient Egypt how they should divide their crops, he states that a portion should be provided to the Pharaoh making a 20% share of the crop Tax.

Taxation and Its Forms

Prior to flat banking in Monetary Economics, "Seigniorage" was a critical form of taxation, this was tax on the creation of money.

There are many other forms of Taxation, some of the more obsolete ones include:

  • Tax Farming - The principle of Tax Farming is to assign the responsibility of Tax revenue collection to groups or private citizens.

  • Tithe - Is one tenth of a persons agricultural produce or earnings (this is a tax like payment). However this is paid to the church making it too specific in technical terms to be called Tax). This method is not to be confused Tithe of the modern era which tends to be voluntary, although at times some churches have sought it with force.

  • Scutage - The military service pay this in lieu. In practice this functions as a Tax but rather than being a Tax as such it is strictly speaking the communication of an obligation of non-tax.

  • Carucage - In England Danegold was replaced by Carucage Tax.

  • Danegold - This was originally land tax from the medieval times, this tax was raised as a pay off to raiding Danes and also at a later date Danegold was used to fund military expenditures.

  • Tallage - Tallage is a tax on feudal dependents.

Accountancy Taxation - Tax Rates and Economics

The Tax Rate is Taxes levied as a percentage. When talking about tax rates it is important to distinguish the difference between the effective (average) rate and the marginal rate. The marginal rate is the rate that you must pay on the next Pound () of income that you earn while the Effective rate is the division of the total tax paid by the amount the tax is paid on.

Taxation transfers wealth from businesses or households to the Government (this is in Economic Terms). Microeconomics notes the side effects of taxation and it states how best to Tax, it is a very important subject in Microeconomics. Taxation is a transfer of wealth, however this transfer of wealth is almost never a simple transfer.

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