Identity Taxation

Rulers who do not identify with certain segments of the population on religious, cultural, political, economic, or sexual orientation grounds are often motivated to induce these “unwanted” populations to convert, assimilate, emigrate, or any other means of complying with the ruler’s identity. Both the historical and social sciences literatures have largely focused on the persecution of these populations. Persecuting rulers use violence to push unwanted populations to abandon their identity or to leave the polity.

However, an alternative policy exists, and it has been common throughout history. This is, namely, “taxing identity”. This happens when rulers use taxes and subsidies to push the unwanted population to endorse the identity of the ruling group. The best known example is the poll (head) tax imposed by the early Arab Caliphate and subsequent Muslim-ruled polities on non-Muslims up to the 19th century.

The Identity Tax Tradeoff

Taxation of identity exposes polities to a tradeoff. On the one hand, the state can raise tax revenue via extracting the unwanted population’s willingness to pay to maintain their identity. On the other hand, the state may want to induce these populations to lose their identity via conversion, assimilation, or emigration. Economists typically focus on the former, what we call the “extraction-only” view. In this view, rulers may tax identity with the sole objective of revenue maximization, perhaps subject to state capacity constraints.

But are rulers always solely concerned with maximizing revenue? We propose in our forthcoming article an alternative “identity-based” explanation. In our model, rulers care not only about money but also about inducing people to lose their identity, even at the expense of a lower tax revenue.

Both the “extraction-only” and our “identity-based” model predict that rulers with stronger identity will impose a higher identity tax and will thus induce more compliance. However, the key difference between the two models lies in their prediction of the identity tax revenue. Whereas the extraction-only model predicts that rulers with stronger identity will raise higher revenue, the identity-based model predicts that these rulers will deliberately lose money for the sake of more assimilation.

Identity Taxes in Medieval Egypt

The early Arab Caliphate represents an ideal case study to examine identity taxation. We focus on the case of early medieval Egypt from the Arab conquest in 641 CE until the Fatimid conquest in 1170. This is the period where papyrological tax records (see the picture above), and medieval narratives on churches, conversion waves, and tax hikes, survived.

A Coptic Christian-majority country on the eve of the Arab conquest, Egypt gradually converted to a Muslim-majority country by 1200. Arabs taxed religion and land. They imposed a poll tax (see below) on Egyptians that was removed upon conversion to Islam. They also imposed a land tax that was paid regardless of the individual’s religious affiliation. Conversion was observable by the state. Converts had to declare their new faith in front of the Arab authorities, adopt an Arabic name, and become a client of an Arabic patron.

List of Poll-Tax Payers, c. 900 CE
Egyptian Tax Register, 704/05 C.E.

We construct novel data from primary sources on taxation and conversions that enable us to test the implications of both the extraction-only and the identity-based models. We exploit the cross-sectional geographic variation in early medieval Egypt with respect to the identity strength of local tax authorities. While the central authority, the Caliph or Egypt’s governor, was Arab Muslim, the local authorities were not necessarily. Arab tribes did not settle everywhere, and Coptic administrators remained in power in certain areas.

We interpret Arab settlement as a measure of the identity strength of local authorities. Arab administrators presumably cared more about conversions to Islam than their Coptic counterparts. We document that areas where Arabs settled faced a higher poll tax rate, and were less likely to have Coptic churches and monasteries circa 1200. In other words, they witnessed more conversions to Islam among Copts. Importantly, these areas raised lower, not higher, tax revenue. The latter result is key because it distinguishes the identity-based model from the extraction-only model, and from the state capacity model.

We then proceed to the time-series evidence. We collected data on poll tax hikes and conversion waves from medieval Coptic narratives. We measure a Caliph’s identity strength by the drinking habits of Caliphs as recorded in Muslim medieval narratives. At the governor level, we measure identity strength by the portrayals of governors’ hostility toward Copts in medieval Coptic narratives. Consistent with the identity-based model, we find that rulers with stronger identity are more likely to induce poll tax hikes and conversion waves than rulers with weaker identity.

Implications

These findings have implications for many other historical and contemporary contexts. Identity taxation existed in various forms throughout ancient, medieval, and modern history. Romans imposed a poll tax on non-citizens until Roman citizenship became universal under Emperor Caracalla. European Jewry were subject to different forms of discriminatory taxation up to the 1800s. Identity taxation can also emerge in constitutional polities. In 1942, Turkey imposed a wealth tax that disproportionately targeted non-Muslims (who were richer on average), leading to their exodus. Identity taxation can even take more subdued forms in democracies, when access to the welfare state is typically restricted to legal permanent residents or citizens, or when elected politicians discriminate across neighborhoods in the provision of public goods based on the ethnoreligious composition of neighborhoods.

Author(s)

  • Mohamed Saleh is a Professor of Economics at the Toulouse School of Economics, University of Toulouse Capitole, Research Affiliate at the Centre for Economic Policy Research, and Member of the Institute for Advanced Study in Toulouse. His research interests are focused on Economic History and Political Economy. In particular, he has been interested in the Economic History of Religion, where he examines the role of taxation in the formation of religious groups in the Middle East and North Africa (via conversions) and in the emergence of inter-religious socioeconomic differences, as well as the effect of state industrialization and public mass education during the last two centuries on these differences. Another topic of his research is the history of labor coercion and land inequality in the region. Professor Saleh’s research is based on novel datasets constructed from both primary (archival) and secondary sources, including historical population censuses and papyrological tax records. His research has been published in leading economics and economic history journals such as Econometrica, Journal of Economic History, and Explorations in Economic History.

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