My book, Tax Law and Social Norms in Mandatory Palestine and Israel, emerged out of an interest I had, as a tax law teacher, in the history of tax avoidance doctrines. One of the topics I taught was seemingly dry and technical rules developed to deal with the grey borderline case of tax avoidance (an activity situated in the middle of the spectrum between criminal tax evasion, and full tax compliance). I soon realized that tax avoidance doctrines were masking deep and contradictory views about the nature of citizenship and the proper relationship between taxpayers and the state. One important factor leading to this realization was a wonderful book by Robert B. Stevens, Law and Politics: The House of Lords as Judicial Body, 1800 – 1976 that analyzed (among other things) the history of English tax avoidance doctrines in the early and middle decades of the twentieth century. Inspired by Stevens’ work I wrote a series of articles in which I attempted to contextualize the history of judicially-created tax avoidance doctrines in the US, UK and Israel, examining various factors such as the personal background of judges, their ideological views, and the economic and political conditions prevalent at the time in which these doctrines were created.
The materials I discovered while writing about Israeli tax doctrines were fascinating. In order to reconstruct the context out of which judicial decisions emerged, I started reading parliamentary debates and legal and economic literature, but I soon came across other types of sources: children’s poems urging compliance, propaganda posters, and even tax-education movies. In the archives I used I encountered an obscure tax system that existed in the Jewish community in Palestine in the 1940s in which law-like norms and institutions were almost totally absent, and social norms rather than legal ones were used to ensure compliance. The tools created by the Jewish communal tax system of the 1940s to ensure compliance were later used by the tax system of the new Israeli state in the 1950s. I then understood that it was impossible to write about the decisions of early Israeli judges without taking into account this non-legal context – the context of what I called in the introduction to my book, “the intimate fiscal state.” This type of state existed in mandatory Palestine and Israel in the middle of the twentieth century, but it later disappeared, to be replaced by a tax system where lawyers and accountants became important intermediaries between taxpayers and the state, severing the relationship of intimacy and civic commitment that existed until then.
One of the interesting institutions established in the early days of the state to instill a sense of civic commitment was the Jerusalem Museum of Taxes. Visiting the Museum was an eye-opening experience for me. In a series of hidden cabinets I unearthed rare artifacts: photos, notebooks, letters, and other objects related to the tax history of late-Ottoman and British-ruled Palestine, and the state of Israel. Browsing through the records found in the Museum I often experienced the joy of archival discovery, being the first person to brush the dust off old records, realizing their value for historical research, and reviving for posterity the lost lives of the forgotten taxpayers and tax officials of mandatory Palestine and Israel.
I thoroughly enjoyed conducting the research for my book, learning about the unknown, and surprisingly colorful, world of Israeli tax history. But the story I tell in the book also contains, I believe, universal lessons. Fighting tax non-compliance is one of the major political and economic challenges facing the world today. The exponential growth in the size of offshore tax havens, and the near bankruptcy of countries such as Greece because of widespread tax evasion, are examples of the seriousness of this challenge, whose consequences are far-reaching: Tax non-compliance undermines the trust that ordinary taxpayers have in their economic and political elites, and has thus played an important role in the partial unraveling of the European Union project, and more generally, in the reemergence of populist nationalism in western countries that we are witnessing these very days. Understanding the way different types of states create tax compliance, and, more generally, social solidarity and trust, is therefore not merely a topic of antiquarian curiosity. History here is also a source for models and lessons that might be relevant again in the present and future.
Pre-order Assaf Likhovski’s book here: Tax Law and Social Norms in Mandatory Palestine and Israel.