One of the things we are going to have to figure out in order to achieve a just and flourishing society is what the human enterprise at large is properly selling, how to price its product properly, how to charge those prices properly, and to whom. Taxes on property or income won’t work, because they are unilateral: there is no way the payer of such a tax can decline to participate in the transaction of taxation, other than by impoverishing himself. The only way a man may decline to pay such taxes is so to arrange things that he has no wealth to be taxed, no stored power or capacity. Taxes on property and income, then, put all his wealth, all his personal assets – his adequacy to the world, including, ultimately, his very person – at the disposal of the tax collector, so that none of it remains simply his, to dispose of as he sees fit.
But this is to insult his inherent dignity as a man – as, that is to say, a rational creature beholden first and foremost to his own apprehensions of the Good, such as they are: to God, and to his duties under God, that derive from his privilege – the logos that is privy to him, and to him uniquely, as an individual creature ordered to the peculiar ends ordained for him by his Creator. A man can have either rights or duties only insofar as there really and practically pertains to him some logos ordered to the telos of his own individual nature, that both forms and binds him. If he be prevented from the power and capacity to express that logos, neither can he be morally obliged, nor can he be either right or wrong, as either succeeding or failing to fulfill that telos. The worthiness or dignity of a man subsists in that fulfillment: in the capacity or power to achieve it, and in the righteous exercise of that power.
Our rights subsist in performing our peculiar duties to the Good; and our duties are to do right by the Good.
7. The law of the LORD is perfect, converting the soul: the testimony of the LORD is sure, making wise the simple.
8. The statutes of the LORD are right, rejoicing the heart: the commandment of the LORD is pure, enlightening the eyes.
9. The fear of the LORD is clean, enduring forever: the judgments of the LORD are true and righteous altogether.
Deprive a man of his power to exercise his privilege then, and you deprive him of his manhood, preventing human goodness.
As levied on that goodness, taxes on income and property devour it even while they hinder its production. They make men into cattle, into chattel slaves, and their overlords the tax farmers into slave masters. They make of society a system of exploitation; when, as the origin of the word testifies, society ought properly to be a company of companions, a companionship – literally, a fellowship that breaks bread together.
The Eucharist goes deep, no?
What, then, if not taxes on property or income?
As it happens, the medieval world did not rely so much on taxes levied on income or wealth. Instead, sovereigns – abbeys, lords, towns – got their revenues from the theloneum, as it was called in Latin, or in Frankish the tonlieu. The tonlieu was what we would these days call a sales tax, a toll, or a license fee. It was a general tax on merchandise, or on the right of passage through the domain of the sovereign:
In the centuries from the ninth to the fourteenth the theloneum continues to exist, perpetuated by the feudal system and by the theory of the complete monopoly exercised over the domain by the dominus or seigneur. The latter demands his share of the proceeds of all commercial transactions – often not in the form of a percentage of the profits but as a certain proportion of the value of the transaction, from both buyer and seller. Merchandise must pay for the privilege of passing through the domain, and often the mere passage by wheeled vehicle becomes a source of revenue. In this age the terms Theloneum and Tonlieu are loosely applied to all taxes on merchandise, but the distinction is usual between pedagium or péage, levied as a kind of customs duty on the passage of goods, and the tonlieu, which is collected in the place where the goods are exposed for sale.
It might appear that these payments affect rather the merchants and the inhabitants of urban centres than the peasants, but the tonlieu is levied on the humblest transactions carried out in the villages, and is always included in the list of domanial rights. Further, the tonlieu is levied, in the market at Arras, Boulogne, or St. Omer, on the produce which the farmer brings in for sale. …
[Under the] tonlieu of the great Abbey of St. Vedast, at Arras …Theloneum is to be paid by all those living outside certain limits. The inhabitants of Arras pay, if they are not men of St. Vedast. Proof of origin may be demanded by the thelonarius, in case of dispute. On transactions begun elsewhere, and completed in the city, the dues must be paid. The priest who trades owes theloneum, except for the horse he buys for his own use, and for his own food and clothing. … The sums due periodically from the stalls in the market are included as theloneum. …
The market is free to all, without exception, who are willing to pay the dues. … In the later centuries of the Middle Ages, the theloneum changes in character, and resembles the modern octroi. It is paid at the entrance to the territory where the goods are to be sold. The payment for étalage, or for displaying goods for sale in the market, becomes a payment of the nature of modern market dues. …
Pedagium … was levied as a return for the privilege of passage with goods, as is indicated by its alternative title of traversum. … The péage was not levied, however, only at seaports, but, more particularly as traversum, it was demanded at various inland villages of this region. Often it appears confused with the payment for the right of passage of vehicles, a tax more in the nature of a modern toll. …
The control of the roads running through the domain is closely connected with the commercial monopoly. We are to imagine the travelling merchant in these times often arriving at a domain through which there is no ‘right of way’, at least for his vehicle or pack-horse. The public road does not yet exist.
— Oxford Studies in Social and Legal History, Volume 4, pp. 50 ff.
The theloneum compensates the sovereign for the costs of maintaining an orderly market. Those who wish to transact in the market must pay dues in the form of a theloneum. Notice first that the payment of theloneum is in exchange for a valuable good: the security of person, property and contract provided by the sovereign to those who transact business in the market he maintains. Note then that entry into the transaction of paying such dues, and buying those services, is entirely voluntary. There is nothing that forces any subject of a sovereign to transact business in a public market; he may barter goods and services freely, with any counterparties whom he trusts enough to forego the enforcement of private contracts and adjudicatory services that the sovereign provides.
We have lots of tonlieux today. Indeed, they are everywhere, as sales taxes, value-added taxes, tariffs, tolls, business license fees, vehicle license fees, road taxes, market fees and dues (such as are imposed by private markets like the New York Stock Exchange), and so forth.
What would happen if we were to abandon income and property taxes in favor of the theloneum? The bewildering array of tonlieux imposed by every petty domain in France, together with their many exemptions (such as those that, e.g., neighbouring abbeys provided to each other) and permutations (e.g., in St. Vedast, local residents otherwise exempt from the theloneum had to pay it if they transacted in gold, slaves or goats) is generally cited as one of the great economic evils of the ancien régime, in that it imposed great friction on trade. We today suffer from just as much bewilderment over our many modern tonlieux, but we suffer also on account of heavy taxes on our labor and thrift.
There is no reason why the latter could not be abandoned altogether, and the revenues replaced – or, even, increased – by means of increases in the tonlieux. The transaction costs associated with the imposition and collection of local tonlieux may as automated be made almost frictionless; and that automation can enable market participants to seek out the least expensive, most efficient markets for their transactions. The local monopoly power of sovereigns would thus be eliminated, at the margin, forcing sovereigns to offer competitive rates of tonlieu for those who do business in their domains. A market of high quality, such as the United States, could charge considerably higher prices than a competitor whose market is smaller, less efficient, less liquid, poorer, or where trade is less secure – think Zimbabwe. California and New York likewise could charge considerably more than Idaho or Montana, and San Francisco more than Fresno.
Reliance on tonlieux would be, not only more just, but more efficient than our current system of mixed tonlieux and taxes on property and wealth. They are not the only sort of just revenues: use taxes and taxes on externalities also result from the free elections of their payers, and do not therefore prevent their proper flourishing. Such other sources of revenue could supplement tonlieux. But tonlieux should perhaps be the basic and predominant source of sovereign revenues.