Thursday, May 21, 2009

Hitler's Tax

According to my colleague John Mikesell, when the Nazi's captured a country that Hitler planned to keep in Greater Germany, it was the Gross Sales Receipts Tax. Here is Mikesell on the GSR in a Tax Policy Podcast from the Tax Foundation. When Hitler conquered a new territory, it was his tax of choice. Lets assume he choose this particular tax to accomplish some particular goal, what could that goal have been?
  1. It's a tax that is hard to see, which is likely why it is politically popular. Doesn't seem like your new dictator would be concerned about being popular with his new servants. Perhaps he did care, as he planned to incorporate them into Greater Germany.
  2. It encourages vertical integration, and a heavy top-down approach sounds very much like the Nazi economy. Yet, if the Fuhrer wanted a vertically integrated industry, it seems that he would have just commanded it.
  3. Deters economic development more than other taxes. This approach might make sense if you think wealth is a fixed amount, then you want to discourage it. I doubt Hitler would have this understanding of the GSR, especially in the 1930's-40's.
Even for Hitler, I don't see how the GSR tax would make sense. Overall, I wonder what kind of taxes do dictators and imperialists prefer? My thinking is that if you are an imperialist you adopt very economically efficient taxes. After all, you'd prefer to be able to steal or trade with a very productive economy, and you have little/no voter consituentcy to satisfy.

1 comment:

Matt E. Ryan said...

Though Hitler's monetary policy begs the question of whether he wanted any functioning non-government sector at all. I've heard his policy of severe hyperinflation as being solely for the purpose of wrecking the existent Germany economy of the time, and the economic track record doesn't exactly prove otherwise.