5,000 Years of Taxes!
February 18, 2025
“There are four major tax systems in place around the world today.”
——-
Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxman, yeah, I’m the taxman
Should five percent appear too small
Be thankful I don’t take it all
‘Cause I’m the taxman, yeah I’m the taxman
– The Beatles “Taxman”
It may be surprising to discover that taxes date back more than 5,000 years.
Virtually, every society that has ever existed established a tax system. As early as 3,000 B.C., ancient Egypt taxed its citizens. Within their system, the Pharaoh empowered scribes, who were enormously powerful tax collectors. It was not uncommon to find scenes depicting the scribe’s often ruthless actions in Egyptian drawings. There was a vast array of taxes which people paid with goods or labor since coin had yet to be invented. Each individual or family paid according to the skill they possessed. For example, craftsmen donated products; hunters supplied food and so on down the societal line. In addition, every single household – no matter its financial standing – had a labor tax obligation. The collective was expected to meet this duty by donating physical work towards the building of mines or canals. To that end, many wealthy citizens annually enlisted and paid the poor to relieve them of these responsibilities.
These are the four primary tax systems in the world today:
1) Citizenship-based taxation
2) Residential taxation
3) Territorial taxation
4) Zero direct taxes
There is only one major country in the world that taxes their citizens based on their citizenship, the United States of America. In the past Mexico, Romania, Bulgaria, Vietnam, and the Philippines all had citizenship-based taxation, but have since abandoned the practice.
Residential taxation and the territorial taxation are the most widely used tax systems in the world. More than 130 countries use a residential tax system. Roughly another 40 countries use the territorial taxation model. This tax system is especially interesting for location independent entrepreneurs.
Then there are 23 countries who don’t charge any direct taxes.
The only major nation that taxes its citizens (and green card holders) regardless of where they live is the United States.
