Paul L. Caron

Friday, January 10, 2020

Weekly SSRN Tax Article Review And Roundup: Kleiman Reviews Zhang's Fiscal Policy In Imperial China

This week, Ariel Jurow Kleiman (San Diego) reviews a new work by Taisu Zhang (Yale), Fiscal Policy and Institutions in Imperial China, forthcoming in the Oxford Research Encyclopedia of Asian History.

StevensonNot being a historian, and knowing next to nothing about Imperial China, it was with humble curiosity that I approached Taisu Zhang’s recent work, Fiscal Policy and Institutions in Imperial China.  I was rewarded with a fascinating account of Chinese fiscal history dating back to the Tang dynasty of the 7th-10th centuries.  The piece focuses on the Ming and Qing dynasties in particular, China’s last two imperial dynasties, which ended in the early 1900s.  In this brief review, rather than marching through Zhang’s expert account, I will highlight a few threads that felt of special relevance to our modern fiscal-political discourse.

Zhang starts with Confucius, who, like all good philosophers, gave some thought to taxes.  Specifically, he disliked them. (Admittedly, perhaps he did not give much thought to taxes.)  Confucius equated tax collection with the “pursuit of material gain,” which he placed in opposition to virtue, the ultimate aim.  Thus, a ruler should only levy taxes if justified by some higher virtue.  

Zhang notes the persistence of such reasoning throughout post-Confucian Chinese political philosophy, despite periods of aggressive taxation under each successive dynasty.  For instance, even the notoriously high-tax Song dynasty (spanning the 10th-13th centuries) took efforts to square its aggressive taxation with Confucian ideals.  Song policymaker Wang Anshi argued that the Song’s high taxes were not merely “accumulating material gain” (yan li), but rather were necessary for “the proper managing of government finances” (li cai). 

Although couched differently, yan li and li cai appear to represent the familiar dyad of traditional conservative and liberal views of government—li cai being the benevolent state, and yan li the ever-expanding (/stifling) bureaucratic behemoth.  Chinese imperial history, much like U.S. political history, reflects an enduring struggle between the two views.

There are familiarities, too, in how central dynastic powers negotiated control among different levels of government.  For instance, the Ming and Qing dynasties (together spanning the 14th-20th centuries) relied on local governments to collect taxes for the central state.  To compensate for this service, they allowed localities to add surcharges, which differed from town to town.  Localities seized this opportunity to add their own taxes and fees to pay for necessary local services.  Fearing confusion among taxpayers and corruption among local governments, Ming and Qing officials enacted laws limiting such local taxes.  Thus, tax limits on local governments, so beloved now in the United States, can trace a historical lineage that includes imperial China.

These familiarities bring to mind a passage from a philosophical text that predates Confucius by four centuries.  Truly, “there is nothing new under the sun.” (Ecclesiastes 1:9)

In the second half of the paper, Zhang sets up a mystery.  The Qing dynasty, China’s last imperial dynasty, did not appreciably increase agriculture taxes throughout its 260-year reign.  It stands in notable contrast to its predecessors, all of whom aggressively raised agricultural taxes at some point, even while paying lip service to Confucian conservatism.  These taxes remained low even when famine, social unrest, and fiscal stagnation brought the Qing to the brink of collapse.  Although the Qing state did ultimately increase non-agricultural taxes, reliance on other taxes could never support a robust state because agriculture constituted the bulk of the economy.

Zhang floats but ultimately rejects several explanations for the Qing paradox, including lack of need, administrative constraints, and dogmatic adherence to Confucian tax skepticism.  His hole-poking in the prevailing theories is thoroughly effective, undergirded by his well-crafted yet concise history of Chinese fiscal policy.     

Rather, Zhang suggests that the transition from the Ming to the Qing dynasty might offer a key to the mystery.  Specifically, peasant rebellions triggered the prior empire’s collapse, and did so in a spectacular fashion, even driving the Ming emperor to commit suicide.  Scholars drew from this experience the lesson that high taxes would prompt rebellion and collapse, which may have informed policies under the Qing.  Zhang makes this suggestion in the last two paragraphs of the article, more after-dinner mint than main course.  It is an appealing explanation—although I would note that Qing politicians must have had somewhat elephantine social memories if events from the mid-1600s guided policies enacted more than two centuries later. 

And yet, perhaps they did.  It may be a uniquely modern—or uniquely American—predilection to ignore the lessons of history.  In doing so we doom ourselves to relive the mistakes of the past.  Not being a historian, I couldn’t possibly anticipate what those mistakes are.

Here’s the rest of this week’s SSRN Tax Roundup:

Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink


These reviews are so wonderful--and this one in particular. I just love that a blog uses the forum for such a perfectly suited purpose: to give readers a quick review of super-recent scholarship. Both the paper and the review are fabulous. Thanks!

Posted by: Jason Kilborn | Jan 10, 2020 1:13:28 PM

Zhang has an interesting view about sin taxes regarding the opium addiction in China. He decided for the ban on opium because the collection of taxes on opium would not match the social damages derived from opium consumption.

Posted by: Monica Victor | Jan 11, 2020 12:46:17 AM