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Among the joys of reading a history of taxes: learning that todays fights over taxes are not new. Civilizations 20 years ago, 200 years ago and 2,000 years ago all struggled with how best to replenish public coffers. Many of the topics in this book also relate to debates in 2021 debates. Fairness. Enforcement and collection. The linkage between taxes, government debt and inflation.

Im weird and want to talk about taxes, like, all the time.

The key to any tax plan and any regime, for that matter is fairness.

Keen and Slemrod highlight one form of fairness known as vertical equity, which compares how taxes affect both the rich and the poor. Theres also horizontal equity, which is fairness among taxpayers in similar economic situations. Throughout history, the legitimacy of a government rests on whether the governed feel both types of equity exist.

President Joe Biden staked his campaign, and now stakes his presidency, on two big tax ideas: First, that a tax hike for households making more than $400,000 is fair the latest test of vertical equity in the United States. Second, that a flat 15 percent corporate tax globally is horizontally fair across countries. If the Biden administration cannot convince Congress to raise taxes on household incomes above $400,000, everything else becomes harder.

On ExpressNews.com: Taylor: Biden's bold plans and the laws of financial physics

Previous post-World War generations of Americans swallowed high income tax rates. Between 1942 and 1954, the top income tax rate fluctuated between 82 percent and 94 percent, hitting incomes between $200,000 and $400,000. In the shared national sacrifice of that era, baseline notions of horizontal and vertical equity were different.

The British Peoples Budget of 1909 a kind of Green New Deal of a previous century explicitly embraced a redistributive income tax. Then-Prime Minister Lloyd George compared the cost of a nobleman to the cost of building the British navy with a memorable argument: A fully equipped duke costs as much to keep up as two Dreadnoughts and they are just as great a terror and they last longer. He had a way with words, as well as a willingness to weaponize class resentments.

My theory on taxes is that people will tolerate a lot as long as they think its fair, both vertically and horizontally. Keen and Slemrods analysis very much supports this view. Taxes perceived to be fair can be on almost anything, and in any amount. Unfair taxes, by contrast, bring down regimes.

Of course, the fairest tax is always the one paid by someone else. Thats why foreign tariffs are popular. Its why hotel occupancy taxes are so popular because only visitors pay. Its why speed traps targeting nonresidents work so well. Keen and Slemrod offer the example of Palmer, outside Dallas on the route to Houston a city with a population of 2,023 whose police wrote 1,080 speeding tickets in 2015.

Tax collection and enforcement is another theme from Keen and Slemrods history. The English Peasants Revolt of 1381. French King Louis XIVs exemption for the French nobility from wealth taxes. The Boston Tea Party of 1773. British Prime Minister Margaret Thatchers disastrous poll tax of 1990.

Tax enforcement has a way of bringing down governments when it goes poorly. Its also a big story in 2021.

The Biden administration has proposed investing $80 billion in the IRS over the next 10 years. To bolster its case, the Treasury Department argued that Americans underpay their taxes by $600 billion per year, or approximately $7 trillion over the next decade.

One very 2021 aspect of this story is the rise of untracked financial transactions, from cryptocurrencies to nonbank payment apps such as Venmo, to offshore entities. If history is any guide, the IRS and other tax authorities will, over time, figure out how to aggressively shut down the tax gap these unreported cash flows allow.

The Treasury notes that for ordinary wage earners getting a W-2, very little income goes unreported. As a result, noncompliance stands at about 1 percent. For high income earners with a more complex set of investments, including private partnership and professional tax preparation help noncompliance can reach 55 percent. These are fighting words. They obviously link quite closely with the issue of vertical equity.

If the Treasury report is correct, a beefed-up IRS could improve tax collection by $1.7 trillion in the next decade. That would have obvious benefits for tackling the growing federal debt.

In the broad sweep of history, a most obvious pattern explored by Keen and Slemrod is the problem of indebted governments, which, over and over again, get that way through war. The authors dig into British, French and American histories, which establish this pattern most strongly. So, if you dont like paying taxes, you should probably start by opposing the wars that make taxation necessary.

On ExpressNews.com: Taylor: Applying a Smart Money analysis to the costly failure in Afghanistan

At the conclusion of the 20-year Afghanistan War, weve got some accumulated government debt.

While criticizing it as overly simple, Keen and Slemrod point to the concept of Ricardian Equivalence, which says accumulated government debt is simply all our future taxes that need to be paid. This isnt quite true, in part because other people may pay our debt. Its also not true in the sense that future inflation changes the value of what we will need to pay.

And with this insight, we get the dirty secret of the relationship between heavily indebted countries, taxes and inflation. Future inflation acts as a semi-visible tax on savers and people on fixed incomes. Tax enough savers through the mechanism of inflation, and the government debt melts away through the years.

This tax via inflation will fall on savers and people on a fixed income, to the benefit of both owners of hard assets and borrowers. It can either seem fair or unfair, depending on how you are situated.

Michael Taylor is a columnist for the San Antonio Express-News and author of The Financial Rules for New College Graduates.

michael@michaelthesmart

money.com |twitter.com/michael_taylor

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Taylor: A fun book about taxes? Yep, and it prompted a flood of ideas about citizenship and fairness - San Antonio Express-News