Magna Carta and Tax Reform

June 15, 2015

Magna Carta is rarely remembered as an instrument of tax reform; rather, we tend to celebrate it for its ban on fish-weirs, standardization of corn measures, exclusion of the d’Athee family from royal service, and, okay, perhaps also its contribution to the development of the rule of law.

But even if we don’t usually think of taxes as Magna Carta’s bailiwick (still less the d’Atheés’: “We will entirely remove from their bailiwicks, the relations of Gérard of Atheé…”), the truth is that the Great Charter signed at Runnymede eight hundred years ago introduced important, if still rudimentary, principles of tax policy, requiring the consent of the governed to levy new taxes and curtailing arbitrary and ruinous taxation. The principles were still in their infancy, but they were a start.

Unsurprisingly, many of the details have little contemporary relevance. Nevertheless, a few provisions are worth noting.

Inheritance Taxes

Feudal estates, termed “fiefs” (held in fee, which is to say, fealty to the crown), were historically granted in exchange for services to the king. To maintain their title, a feudal lord’s heirs were required to pay the “feudal relief,” essentially an inheritance tax in lieu of services. (The word “relief” means to lift up again, referring in this instance to the restoration of title to the fief.)

King John had been accused by the nobles of imposing extortionate reliefs, one of the key complaints leading to the encounter at Runnymede. Magna Carta established fixed rates for reliefs, thus establishing the first independent right of inheritance in English law and mandating a measure of tax neutrality while limiting the sovereign’s ability to impose extortionate levies.

The holding of land by leave of the sovereign would continue, at least in part, for centuries; only with the abolition of feudal tenure in 1660 would all land convert to fee simple, meaning that no service obligations attached to ownership. Nevertheless, Magna Carta advanced the principle of by-right inheritance by constraining the king’s ability to break up fiefs through extortionate taxes, and by limiting the degree to which ownership was tied to service to the crown.

Taxation by Consent of the Governed

The Declaration of Independence asserts that governments “deriv[e] their just powers from the consent of the governed,” distilling concepts invoked by Locke and earlier English political reformers. For the English-speaking world, however, the germ of that concept can be found in Magna Carta.

At the time, feudal barons could be required to provide what was known as “scutage,” essentially a fee in lieu of personal service typically used to hire mercenaries to fight the king’s wars. Other aid levies were also common. King John, however, was perceived as abusing the system, imposing unusually high levies and doing so even in the absence of war.

Magna Carta introduced a revolutionary innovation: the idea that the power to tax was in some way limited by general consent. Still, it being the year 1215, there were some loopholes:

No scutage nor aid shall be imposed on our kingdom, unless by common counsel [alt. “general consent”] of our kingdom, except for ransoming our person, for making our eldest son a knight, and for once marrying our eldest daughter; and for these there shall not be levied more than a reasonable aid…

Limited, yes, but still something new: the idea that the power to tax was not theoretically boundless.

Eight Hundred Years Later

Of course, Magna Carta ushered in no great era of liberty. The Great Charter of the Liberties had to be revised and reissued within a year, and many times thereafter. Provisions lapsed, details changed, and very few of its original clauses retain the force of law in Great Britain. Its foundational principles, like government by consent and due process of law, were limited in their application to a small number of noble families. And England was far from the first country to develop these principles or establish checks on the royal prerogative.

Nevertheless, the Charter sealed at Runnymede reverberates through the centuries, and ideas germinating in Magna Carta have blossomed into rights and liberties embraced throughout much of the world.

Not bad for a document that also concerned itself with the removal of fish-weirs. Happy 800th anniversary, Magna Carta!

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