There is a horrifying similarity between 2020s America and 1780s France, on the eve of that nation’s bloody revolution.
In 1780s France, the nobility (the rich) paid no taxes. In the 2020s, America’s rich pay no taxes. The policy of not taxing the rich led straight to the French Revolution and the Reign of Terror.
To explain, by 1786 France was broke because people with income were not paying taxes. Moreover, most historians blame King Louis XVI’s clumsy efforts to tax the rich for triggering the French Revolution.
The Paper King
On paper, French King Louis XVI was one of the most powerful men on Earth.
France was the largest and richest nation in Europe. In addition, France was one of the most scientifically and technologically advanced countries on Earth and the center of European Culture. Additionally, France had one of the world’s largest and most advanced armies.
Theoretically, Louis XVI was an absolute monarch with total control over all aspects of France’s culture, society, government, and economy. In reality, the King’s power was an illusion.
To elaborate, like all governments, they built the French Monarchy on compromise. The French Crown’s compromise was that the King’s power was absolute as long as the government did not interfere with the lifestyles of the nobility.
For example, the French Social Contract was that the French Nobility got tax exemption for accepting a powerful King. As King Louis XVI could order his armies to crush almost any European country. However, Louis XVI could not collect taxes from petty nobles in Grenoble.
The French nobility, like America’s modern elite, were experts at manipulating the system to preserve their power and privilege. For example, a series of courts called parlements could veto any law the King promulgated.
The members of the parlements were nobles who could block any tax on the nobility. Thus, Louis XVI had no legal way to raise the money the government needed. To explain, the nobles (the rich) held most of France’s money and property.
Moreover, the Kingdom of France could not issue debt to finance the government, as its rival, the United Kingdom could. The nobles blocked efforts to create a national debt in France, because they knew a national debt could lead to higher taxes.
The Bankrupt Kingdom
On 8 August 1786, King Louis XVI got some terrible news from his finance minister, Charles Alexandre de Calonne. Calonne told the King that France was close to bankruptcy.
To elaborate, the one tax that generated enough revenue to pay the Crown’s bills was about to expire. The tax was the Vingtième, a 5% income tax on all citizens, including the clergy and the nobility. King Louis XV had levied the vingtième as an emergency measure to pay for the Seven Years’ War in 1756.
Like many emergency taxes, the vingtième survived and become critical to the state. However, the vingtième was scheduled to expire at the end of 1786. Predictably, the parlements were unlikely to extend the vingtième.
Without the vingtième, the Kingdom could not pay its bills. In other words, France could be broke in 1787, unless Louis XVI could raise taxes.
Unfortunately, France’s unwritten constitution gave Louis few options. In theory, Louis XVI could impose a tax and order the army to collect it. In reality, most of the army’s officers were nobles who were not likely to tax themselves or their families. Hence, Louis XVI had no means of collecting the tax.
The King’s Dilemma
Thus, Louis XVI needed legal cover to create and collect new taxes. French law gave the King two options, both of which were terrible.
First, Louis could convene the Assembly of Notables. The Assembly of Notables was a body of prominent French citizens that could propose new laws to the King.
Louis’s hope was that the parlements could be likely to accept a tax proposed by the Notables. The problem was that nobles comprised the bulk of the Assembly of Notables. Hence, taxes were a tough sell to the body.
Second, Louis could convene the Estates General, France’s national legislative assembly. Unfortunately, the Estates General had not met since 1614. Hence, no living person had any experience with it.
Convening the Estates General was dangerous because radicals could hijack the body and turn it into a Constitutional Convention. To explain, the Estates General comprised three houses or estates, commons, nobles, and clergy. All three were equal.
However by the 1780s, many French radicals had a theory that individual members of the estates could reform as a unicameral (one-house) national legislature. The new legislature could give itself the power to rewrite France’s Constitution.
The King first convened the Assembly of Notables. Convening the Assembly was the simple part. Convincing the Notables to impose new taxes proved impossible.
Louis’s ministers first had to convince the Notables that new taxes were necessary. To that end, they revealed one of France’s most closely guarded secrets, that the nation was broke, to the Notables.
Incredibly, not even evidence of national insolvency and impending economic catastrophe could convince the Notables to increase taxes. Instead of approving new taxes, the Notables began attacking the King.
On 25 May 1787, the House of Notables adjourned without accomplishing a thing. The King had no choice but to call the Estates General. The American Revolutionary War hero the Marquis de Lafayette, a member of the Assembly, believed the French Revolution began with the Notables’ failure.
The Estates General
It took almost two years, until 5 May 1789, for the Estates General to convene. During those years, France’s economic situation become worse and worse. The money supply shrank, many people could not buy food, and radical ideas spread like wildfire.
When the Estates began, the radicals were ready. Radicals in each house refused to accept the King’s command to split into three separate bodies. Instead, the Estates became deadlocked. Some members wanted to split while others wanted unity.
The radicals declared themselves the National Assembly and took over the First Estate (the Commons). Eventually, many members of the First Estate (the Clergy) and the Second Estate (the Nobility) joined the National Assembly.
By 20 June 1789, the King lost his patience and ordered soldiers to block the entrance to the First Estate’s meeting room. In response, the National Assembly gathered at the Royal Tennis Court and took an oath to resist the King.
The French Revolution had begun. By July, the National Assembly began writing a new Constitution for France. Ironically, the National Assembly had done nothing about the financial crisis.
Over the next decade, France’s nobles paid a terrible price for generations of refusal to pay taxes and income inequality. Many nobles fled the country and lost their property and status.
During the Reign of Terror, or La Terror, the Revolutionary government arrested 300,000 people and executed around 17,000 people. Another 10,000 people died in prison without trial. Many of La Terror’s victims were nobles. One of La Terror’s first victims was King Louis XVI who went to the guillotine on 21 January 1793.
Thousands more perished in the Wars of the Vendée, a guerrilla war between the French Army and conservative Roman Catholic Peasants. The Vendée conflict was so bloody, many historians label it genocide. Writer Jaspreet Singh Boparai estimates that up to 117,000 people “disappeared” during the Wars of the Vendée.
Beyond the violence in France, the Revolution plunged Europe into a series of wars that lasted until 1815. A dispute over taxes exploded into a revolution that ushered in a new era of history.
Income Inequality American Style
Frustration over taxes is growing in America. On 8 June 2021, ProPublica ignited a media firestorm by exposing a trove of secret IRS documents that show many American billionaires pay few taxes.
In particular, ProPublica alleges Elon Musk, the world’s richest man with a personal fortune of $292.6 billion on 30 October 2021, paid no federal income taxes in 2018. Several other billionaires, including Jeff Bezos, George Soros, Michael Bloomberg, and Carl Icahn have also paid no income taxes in recent years, ProPublica claims.
“The results are stark,” ProPublica alleges. “According to Forbes, those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.”
The 25 are the 25 richest Americans. In contrast, ProPublica estimates the typical American middle-class household pays a federal tax rate of 14%.
Similarly, fiscal crises are becoming common in Washington. For example, the US came close to default in October 2021 because Congress almost failed to raise the debt ceiling, Reuters reports. To explain, the debt ceiling is the amount of money the federal government can borrow without Congressional approval. Notably, the US could hit the debt ceiling and face default again as early as 3 December 2021.
America cannot solve its fiscal crisis because a tiny minority refuses to pay taxes. A similar minority plunged France into one of history’s bloodiest revolutions over taxes.
Frustration over taxation and income inequality is growing in America. Two US Senators; Kyrsten Sinema (D-Arizona) and Joe Manchin (D-West Virginia) widely viewed as billionaires’ hirelings cannot escape aggressive protesters. Protesters even chased Sinema into the bathroom and visited Manchin at his houseboat. In 2020, another group of radicals built a guillotine; the execution device La Terror made famous, outside Jeff Bezos’ Washington, DC, mansion.
Thus, tensions over taxes are growing in America. Many people will wonder if America will repeat the mistakes of 18th Century France and find itself plunged into a bloody revolution by taxes.