My aunt is Queen Ma

Chapter 106 Tax

Ever since he finished the lesson on productivity, Zhu Yuanzhang has been thinking about all kinds of institutional issues.

The subsequent lectures did indeed give them a lot of inspiration.

He overturned almost all the systems he had previously conceived.

At the time, he believed that he could definitely come up with a more perfect system than his predecessors.

However, reality told him that he was overthinking it.

It was precisely because of this that he became more clearly aware of his shortcomings.

That's why I'm so eager to hear Ma Yu's specific suggestions.

Regardless of whether his advice is ultimately adopted, it can at least provide a reference for oneself.

Empress Ma and Zhu Biao shared roughly the same emotional journey.

Furthermore, they wanted to see how Ma Yu connected new ideas with systems.

After a moment's thought, Ma Yu spoke:
"The history of taxation is generally a process of going from simple to complex, and then back to simple."

Zhu Biao asked in confusion, "Aren't the types of taxes constantly increasing?"

From the initial well-field system, they contributed their labor to the country.

Later, with the rise of private ownership, it turned into corvée labor and taxes.

Then all sorts of exorbitant taxes and levies started to appear.

Ma Yu explained, "The reason why things have become more complex is because as productivity has developed, there are more ways to acquire wealth."

"The number of localities collecting taxes is also increasing accordingly."

"This is the result of reality influencing the legal system."

"The simplification of complexity is the result of human choice."

"To reduce administrative costs, the government has been merging similar taxes to simplify the tax collection process."

"Simply put, the more types and complex the taxes, the more difficult it is to collect them."

"There have even been instances where the cost of taxation exceeds the amount of tax paid."

"As we have said before, the imperial court will invest resources without regard to cost only in a few indispensable areas such as military affairs."

“In most other places, cost is a major consideration.”

"The same applies to taxation."

"The imperial court will selectively merge or abolish taxes that are difficult to collect and have low tax amounts."

"To reduce costs and improve tax collection efficiency."

"The most successful simplification was the two-tax system."

Zhu Biao suddenly realized: "If all industries are developing in an agricultural society, then all industries can be taxed."

"But some industries are small in scale, and it is very troublesome to collect taxes."

"Therefore, the tax is either combined with other industries or simply not levied."

Ma Yu nodded and said, "That's right. After the An Lushan Rebellion, the Tang Dynasty gradually lost control over the local areas."

"The imperial court's inability to grasp the local situation led to chaos in the fiscal and taxation system."

"How taxes are levied and how much is levied are entirely up to local officials."

"They levied exorbitant taxes under various pretexts, but all the money ended up in the pockets of officials, leaving the national treasury empty."

"The Two-Tax Law was to merge all kinds of taxes into a poll tax and a land tax."

"As long as the imperial court has a general understanding of the population and land area, it can effectively collect taxes."

"Furthermore, it has simplified the tax collection process, reducing the opportunities for corrupt officials to manipulate the system."

"The Tang Dynasty's financial problems were thus resolved."

It is no exaggeration to say that the Two-Tax System extended the life of the Tang Dynasty by a century.

"But the success of the two-tax law is far more complicated than it appears on the surface."

"It's called a two-tax system, but it would be more accurate to call it a three-tax system."

Zhu Yuanzhang asked in surprise, "Oh, what is the third type of tax?"

Ma Yu replied, "Miscellaneous taxes."

Zhu Yuanzhang frowned: "Miscellaneous taxes?"

Ma Yu explained, "The two taxes are regular taxes, and the full amount is turned over to the national treasury."

"But local government offices also need money to operate. Where does that money come from?"

Zhu Biao blurted out, "Miscellaneous taxes."

This is not complicated; anyone who has studied ancient finance and taxation systems can understand it.

In ancient times, taxes were generally divided into two types: regular taxes and miscellaneous taxes.

Regular taxes were turned over to the national treasury, while miscellaneous taxes were handled by local government offices.

Ma Yu said, "Yes, the third type of tax is miscellaneous taxes."

"After the reform of the Two-Tax System in the Tang Dynasty, the actual tax system was the Two-Tax System plus miscellaneous taxes."

"The Two-Tax Law merged the main taxes into two items and also defined the general categories of miscellaneous taxes."

"It not only protected the interests of the imperial court, but also made it profitable for local government offices."

"Moreover, the types of taxes to be paid were clearly defined, which reduced the room for officials to create new pretexts, and the people also benefited."

"It can be said that the interests of all parties have been taken into account, which is the fundamental reason for the success of the two-tax reform."

Zhu Yuanzhang snorted and said, "That sounds nice, but miscellaneous taxes are just an excuse for officials to exploit the people."

"Such leniency will inevitably lead to corruption among officials, and ultimately it will be the people who suffer."

Ma Yu did not argue with him, but said:

"Your Majesty, please don't rush to conclusions. Let's look at a few more negative examples."

“From the implementation of the Two-Tax System until the Yuan Dynasty, many people tried to reform the tax system, but most of them failed.”

"Let's take Wang Anshi's reforms as an example. His main reform of the tax system was the Fangtian Equal Tax Law."

"In this process, he also merged various taxes into two taxes for unified collection."

"However, unlike the reform in the Tang Dynasty, Wang Anshi merged miscellaneous taxes into the regular taxes."

"This method did indeed accumulate a large amount of wealth for the Song Dynasty's treasury in the short term, alleviating its financial pressure."

"However, by removing the miscellaneous taxes, he cut off the livelihood of the local government."

"From this point of view, he has offended the entire bureaucratic class."

“Local government offices that have lost their livelihoods certainly won’t just sit and wait to starve.”

"In order to make money, they will come up with new pretexts to collect miscellaneous taxes again."

"The common people would essentially be paying miscellaneous taxes twice, increasing their burden, and naturally they would oppose the reforms."

"The essence of the Fangtian Equal Tax Law is the combination of two taxes plus miscellaneous taxes."

"It enriched the national treasury, offended officials, and harmed the people."

"Failure was an inevitable outcome."

In fact, similar problems arose during Zhang Juzheng's reforms in the Ming Dynasty.

The Single Whip Law merged all taxes into one, converted them into silver, and submitted them to the national treasury.

The local government immediately devised various pretexts to extort ten or even a hundred times the amount of money lost from the people.

The essence of the Single Whip Law was also the Two-Tax System plus miscellaneous taxes.

Ultimately, it is the ordinary people who suffer.

Of course, by Zhang Juzheng's time, the Ming Dynasty was already in a state of deep-seated problems that were difficult to reverse.

He was, after all, just a subject, not a real emperor.

In other words, patching things up won't change the overall situation.

So we can't entirely blame him.

But during Wang Anshi's time, the problems in the Northern Song Dynasty were not nearly as serious.

His reforms not only failed to solve the problem, but also exacerbated the conflict and made the problem even more serious.

It can only be described as a matter of ability.

Zhu Yuanzhang sarcastically remarked, "Wang Anshi is truly a traitor to the people."

"But the most despicable are those local officials who use various pretexts to exploit the people; they deserve to die."

Ma Yu shook his head and said, "But the government offices do need money to operate. We can't expect officials to pay for the government's services themselves, can we?"

Zhu Yuanzhang immediately fell silent.

Although he wished he could make officials work like oxen and horses for free, he knew that was unrealistic.

Taking away the miscellaneous taxes that were originally reserved for local government offices is forcing them to exploit the people.

This is reality, and it cannot be changed.

Looking back at the tax laws he had previously drafted, he also failed to consider the practical needs of local government offices.

If this policy is actually implemented, it probably won't be long before the grassroots level is in complete chaos.

No, wait... Our tax law hasn't even been promulgated yet, and the grassroots tax system is already a complete mess.

We must execute a group of corrupt officials, terrify them, and eradicate the evil practices left over from the Yuan Dynasty.

However, the actual needs of local government offices must also be taken into account.

We'll have to think about it carefully then, deciding which taxes can be retained by them and how to monitor where the money goes. But the foundation for all of this is still training a sufficient number of accountants.

It seems that the Imperial College's mathematics classes will need to expand their enrollment.

Zhu Biao also showed a thoughtful expression, something he hadn't considered before.

After listening to Ma Yu's analysis, I realized that there were so many secrets hidden in this matter.

Ma Yu paused for a moment, waiting for the two of them to have no objections, before continuing:

"What I just talked about was the general development of taxation. Now let's talk about taxation itself."

"First, we need to figure out one thing: who should the imperial court ask to collect taxes?"

Zhu Biao said, "Taxing taxes from the people has always been the way it has been since ancient times."

Ma Yu shook his head and said, "Has it always been true?"

"Moreover, times change and circumstances change; what were good methods in ancient times may not be applicable now."

At this moment, Zhu Yuanzhang had an idea and said, "Is it appropriate to ask the wealthy to pay taxes?"

Ma Yu praised, "Your Majesty is wise; you should levy taxes on the wealthy."

Seeing that Empress Ma and Zhu Biao both looked puzzled, he explained:

"What is the essence of taxation? It is the redistribution of wealth."

"The new ideas also state that taxation is to reduce the surplus and supplement the deficiency."

"Those who possess wealth are 'have more' than others, while the poor are 'have less' than others."

"If the court wants long-term stability, it must find a way to collect taxes from the rich and then use those taxes to help the poor."

"However, in every dynasty, it was the other way around."

"They colluded with the rich to exploit the people, and as a result, the people could no longer survive and rebelled."

"The country couldn't even afford to maintain its army, let alone provide relief to its people, and ultimately perished in a popular uprising."

Empress Ma and Zhu Biao suddenly realized that this was what it meant to guide institutional development with new ideas.

They were enlightened, as if a new world had been opened to them.

I found the answers to all the questions I had accumulated while reading history books.

Zhu Yuanzhang nodded slightly, but then retorted, "Every family has its own troubles."

"As you said before, the Qin, Han, Sui and Tang dynasties were the era of aristocratic politics, and the imperial court could only maintain national stability by cooperating with them."

"Otherwise, if those powerful families unite, the country will probably perish."

"In order to solve the problem of military chaos during the late Tang Dynasty and the Five Dynasties and Ten Kingdoms period, the Song Dynasty chose to govern the country together with the scholar-officials."

"Therefore, they also had to grant the scholar-officials various privileges."

"As for the Yuan Dynasty, let's not mention it."

"This shows that they are not unaware of this principle, but the situation does not allow them to do so."

Ma Yu did not object to this: "Your Majesty is right. Every era has its own difficulties."

"We cannot judge the actions of the ancients by today's standards."

"But the problems faced by the Han, Tang and Song dynasties no longer exist in the Ming dynasty."

"The conditions for implementing the policy of 'taking from the surplus and giving to the deficiency' have been met."

Zhu Yuanzhang nodded and said, "That's true, but how exactly should it be done?"

Ma Yu replied, "That's the topic we'll discuss next."

"Now that we've clarified who should collect the taxes, the next step is to consider how to increase tax revenue."

"The first issue is how to identify taxpayer groups in a simple and effective way."

"As we just mentioned, with the development of productivity, there are more ways to acquire wealth."

"The types of taxes have also increased, and the groups of taxpayers have become more complex."

"In order to save costs, the imperial court must simplify the types of taxes and the methods of tax collection."

"Now that we are going to tax the rich, it means that we must adopt a simple and effective way to distinguish between the poor and the rich."

"Otherwise, taking from the surplus to make up for the deficiency is just empty talk."

Zhu Yuanzhang and the others frowned. This seemed simple, but it was actually very complicated.

There are over 60 million people in the world. Whether it's even possible to screen them all is another matter.

Even if it were achieved, the cost would be astronomical, and it would easily leave room for corrupt officials to manipulate things.

Zhu Yuanzhang racked his brains but couldn't come up with a better solution, so he simply stopped making things difficult for himself and asked directly:
"If you have any good ideas, just share them."

Ma Yu didn't keep people in suspense and said:

"The most important means of production now is land, so let's focus on land."

"The Tang Dynasty invented the Two-Tax System, which unified various regular taxes into the Two-Tax System."

"Then let's follow this approach and incorporate the poll tax and corvée labor into the land tax."

"From now on, those who own land will pay taxes, while those who own neither land nor property will be exempt from taxes or corvée labor."

"As for corvée labor, the imperial court can use the tax revenue to hire displaced people to work."

"In this way, people with land can farm with peace of mind without worrying about corvée labor."

"People who have lost their land can also earn money to support their families by working."

"The imperial court's projects will not be delayed."

"I call this method 'incorporating land tax into poll tax'."

Divide a small family into an acre?

Zhu Yuanzhang, Empress Ma, Zhu Biao, and Zhu Shuang all showed expressions of shock.

This method is extremely bold.

The key is indeed very simple, even simpler than the two-tax law.

Because under the Two-Tax System, you need to count the total population before you can levy a poll tax.

However, the population changes, and in principle, it needs to be counted every once in a while.

Not only is it troublesome, but it also increases costs, making it a losing proposition.

But land is different; it has a limited quantity.

To put it more bluntly, barring a major disaster, the amount of land will only increase, not decrease.

Even if we stop measuring the amount of land in the future and only collect taxes based on the current amount, it will be enough to solve the fiscal problem.

The more they thought about it, the more they felt it was an absolutely brilliant idea.

Empress Ma praised, "Yu'er has truly broadened my horizons. If this method can be implemented, it will surely benefit the country and the people."

Zhu Biao nodded in agreement: "If this method is adopted, people without land will no longer have to pay taxes and perform corvée labor."

"It greatly reduced their burden."

"Moreover, without the burden of taxes, displaced people can go out to work without any worries and engage in other industries to change their circumstances."

"This method is truly ingenious."

Zhu Yuanzhang nodded in approval; this method reduced the types of taxes and simplified the tax collection process.

This reduced the administrative costs for the imperial court.

It also benefits all parties involved, making it a truly perfect solution.

Ma Yu was not lying; he did indeed have a complete plan for governing the country in his mind.

Seeing that they understood, Ma Yu continued:

"If the Ming Dynasty wants to develop its productive forces and promote all industries, then industry and commerce will inevitably flourish in the future."

"Commercial taxes will also be a top priority."

"However, I don't know much about this area. Your Majesty can find someone knowledgeable to design a commercial tax system."

Zhu Yuanzhang nodded and said, "We have already arranged for people to do this. We'll talk about it again once they come up with the plan."

Ma Yu nodded and then said, "There's another problem with taxation."

"The more money and power a person has, the more ways they can avoid taxes."

"For example, concealing one's true wealth and paying only a small amount of tax."

"Their most common and most insidious method is to shift the burden of taxes onto others."

"The imperial court stipulated that one-twentieth of the taxes should be paid, so they passed on their taxes to the people."

"Ask the people to pay one-fifteenth or even one-tenth of the taxes."

"Therefore, the imperial court must find a way to identify the wealthy and levy taxes on them."

Zhu Yuanzhang's expression was grave. He asked, "Do you have any ideas?"

Ma Yu shook his head and said, "There is no readily available solution, but your previous establishment of the Embroidered Uniform Guard gave me an idea."

"Could we set up an agency specifically to collect taxes from the rich?"

"Their job is to investigate the wealth of the rich and then collect the taxes according to the tax law."

Zhu Yuanzhang's eyes lit up, and he said, "This method is quite interesting."

"I'll think about it carefully later and see how to do it specifically."

Then he pressed further, "Is there anything else?"

(End of this chapter)