Key Takeaways
- Taxes are designed to generate revenue for the government. But taxes also influence consumer behavior, whether intentionally or unintentionally.
- When taxes intentionally influenced behavior:
- The Beard Tax (1698): Tsar of Russia, Peter the Great, sought to Westernize the country and compelled men to remove their facial hair through a “beard tax.” Men could pay the tax to keep their beards or shave.
- Modern excise taxes—like those on cigarettes, alcohol, and sugar—also attempt to curb “negative” consumer behavior.
- When taxes unintentionally influenced behavior:
- The Window Tax (18th and 19th century): To raise taxes on the wealthy, the English government imposed a property tax based on the number of windows in a house. Instead of paying the tax, building owners bricked over their windows.
- The Mansard Roof: Paris also attempted to tax the wealthy by levying a property tax on the number of floors below a home’s roofline. In response, home designers invented an entirely new architectural style for the purpose of creating more living space out of fewer floors—the Mansard roof. This behavior shaped the architecture we see to this day.
- The Chicken Tax (1960s): European farmers were unhappy with how much chicken was being imported from US farmers, so European governments implemented tariffs on all US poultry. President Lyndon B. Johnson then retaliated with tariffs on imported light trucks and cargo vans from Europe, resulting in a system of disassembling and reassembling vehicles to get around the tax. Those tariffs still limit the vehicles you can buy today.
- All taxes have an impact. While some examples of their influence are silly or odd, they can also have meaningful results, like the French and American Revolutions.
- Taxes aren’t just a line on a paystub or at the bottom of your receipt; we can see their influence all around us.
Transcript
What do beards, chickens, and windows have in common? Surprisingly, taxes.
Taxes are designed to generate revenue for the government. But taxes also impact behavior—sometimes on purpose, and sometimes in very unexpected ways.
In 1698, Tsar of Russia Peter the Great wanted to Westernize the country and change the “face” of Russia. Literally.
His plan included compelling men to ditch their facial hair through a “beard tax.” Men could pay to keep their beards, or shave and save.
The beard tax was intended to change behavior, but other taxes can produce all sorts of unintended consequences.
In 18th– and 19th-century England, the government imposed a property tax on the number of windows in a house. In response, building owners bricked over their windows.
When Paris tried a similar property tax levied on the number of floors below a home’s roofline, architects created the Mansard roof to make more living space out of fewer floors.
Thanks to this design, homeowners could have shelter from the weather and unwanted taxes. And then there’s the chicken tax.
In the 1960s, the US exported a LOT of chicken to Europe. European farmers got their feathers ruffled, so their governments slapped tariffs on all poultry from across the pond.
President LBJ called “fowl” play and retaliated with tariffs on imported light trucks and cargo vans from Europe. To get around the tax, some US companies that manufactured abroad disassembled entire vans, shipped them to the US, and reassembled them.
Taxes always have consequences. Sometimes intentional, sometimes not, and occasionally just plain weird.
