First Income Tax – Egypt 3,000 BC

The first income tax is generally attributed to Egypt where the Pharaohs collected taxes from their citizens. There is documented evidence of a biennial event, the ‘Following of Horus’, no less than a royal tour when the pharaoh appeared before his people and collected taxes.

Egyptians did not have coined money, so their taxes were levied on harvests and property. Like today, the taxes were used to stabilise and enrich society. The taxed grain was stored for distribution in times of hardship, used to feed public workers and feed the poorer classes.

The agricultural sector of the economy was the easiest to tax, as the tax collectors just seized part of a farmer’s produce, merchandise, or property. This resulted in the peasants, today’s working class, being the highest and most consistently taxed part of the population. As other sectors of the economy were harder to tax, Amasis (Ahmose II 569-526 BC, one of the last Pharaohs), legislated the first annual tax return upon his citizens. The law required that every year each Egyptian should declare to the ruler of his district, from what source he got his livelihood, and how much it was. The penalty for failing to lodge the tax return, or lodging a false tax return, was punishable by death.

One tax planning strategy to escape the Egyptian Pharaohs Tax involved becoming a resident of a tax-exempt city (basically a tax haven), like Thebes. Under Osorkon II of the 22nd dynasty, the inhabitants of the city of Thebes did not have to pay any taxes to the royal treasury. The king said ‘I have protected Thebes in her height and in her breadth, pure, delivered to her lord. No inspectors of the king’s house journey to her; her people are protected forever’.